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Economy in Brief

U.S. Wholesale Inventories Inch Higher
by Tom Moeller  September 10, 2014

Inventories at the wholesale level edged 0.1% higher during July following a 0.2% June increase, revised from 0.3%. Inventories of durable goods increased 0.3% (8.4% y/y). Hardware inventories gained 1.8% (7.6% y/y while motor vehicle inventories increased 1.0% (10.9% y/y). Machinery inventories were up 0.5% (11.4% y/y). To the downside, furniture inventories slipped 0.2 (+5.6 y/y) and professional equipment inventories fell 0.8% (+6.4% y/y). In the nondurables sector, inventories were unchanged (+7.0% y/y). An 8.2% shortfall (-3.4% y/y) in farm product inventories was accompanied by a 3.0% decline (-6.8% y/y) in petroleum inventories. Chemical inventories dropped 1.2% (+4.0% y/y) and paper products inventories fell 0.7% (+2.5% y/y). These declines were offset by a 3.2% increase (24.2% y/y) in drugs and a 1.9% rise (10.0% y/y) in apparel. Grocery product inventories rose 1.3% (3.9% y/y).

Wholesales sector sales increased 0.7% (7.5% y/y) led by a 1.0% jump (7.2% y/y) in nondurable goods. A 2.9% gain (9.5% y/y) in groceries paced the increase followed by a 2.6% rise (8.9% y/y) in petroleum. Paper sales rose 1.9% (10.4% y/y) but apparel sales declined 0.6% (+7.3% y/y). Chemical sales also were off 0.3% (+6.3% y/y). To the upside, sales of durable goods edged 0.4% higher (8.0% y/y) led by a 4.5% jump (19.3% y/y in metals. Construction product sales improved 0.7% (7.1% y/y) and sales of furniture gained 0.6% (0.5% y/y). Working the other way, automotive sales slipped 0.2% (9.3% y/y) and commercial equipment sales were off 0.6% (+6.3% y/y).

The inventory-to-sales ratio fell to 1.16, the lowest level since December. The decline was led by a lower nondurables ratio which fell to 0.82, paced by a lessened ratio in paper and sharply lower ratios for groceries & farm products. In the durable goods sector, the I/S ratio held steady at 1.57 as declines in computer equipment and metals were offset by increases in hardware and electrical equipment.

The wholesale trade figures are available in Haver's USECON database.

Assessing Expectations of Monetary Policy from the Federal Reserve Bank of San Francisco is available here.

Wholesale Sector - NAICS Classification (%) Jul Jun May Y/Y 2013 2012 2011
Inventories 0.1 0.2 0.3 7.9 4.0 5.5 9.4
Sales 0.7 0.4 0.7 7.5 4.2 4.8 12.4
I/S Ratio 1.16 1.17 1.17 1.16 (July'13) 1.17 1.18 1.15
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