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Economy in Brief

U.S. Wholesale Inventories Post Broad-Based Strength
by Tom Moeller  October 9, 2014

Inventories in the wholesale sector increased 0.7% (7.9% y/y) during August, the strongest rise since April. Quicker inventory building stretched across industry sectors. Durable goods inventories grew 0.8% (8.5% y/y) paced by a 4.5% jump (13.6% y/y) in computer equipment. Construction materials gained 1.5% (8.7% y/y) and electrical equipment inventories increased 1.1% (7.2% y/y). Motor vehicle & parts rose a lesser 0.6% (8.3% y/y) but metals slipped 0.1% (+8.6% y/y), down for the second straight month. Amongst nondurable goods industries, inventories gained 0.5% (6.9% y/y) following three straight months of decline or stability. Apparel inventories jumped 0.7% (11.0% y/y) while farm products surged 1.0% (4.8% y/y). These gains were offset by a 2.6% decline (+2.8% y/y) in chemicals and a 1.8% drop (+3.0% y/y) in paper. The value of petroleum inventories rose 0.5% but declined 9.0% y/y.

Sales at the wholesale level declined 0.7% (+5.8% y/y) in August, the first decline since January. Durable goods sales notched 0.1% higher (+7.0% y/y) but that was held back by declines in several industry categories. Computer sales dropped 1.7% (-0.3% y/y), electrical equipment sales fell 0.5% (+3.2% y/y) and motor vehicles also fell 0.5% (+10.3% y/y). In the nondurables goods area, sales declined 1.3% (+4.7% y/y), led by a 4.2% drop (+0.9% y/y) in petroleum. Farm product sales fell 3.8% (-5.6% y/y), the third straight month of sharp decline. These declines were offset by a 3.4% rise (13.4% y/y) in apparel sales.

The inventory to sales ratio improved to 1.19, the highest level in six months. The ratio for durable goods wholesalers rose to 1.58, the highest level in three months. The ratio in motor vehicles rose to 1.57 but for computer equipment it was only 0.84. In the nondurable area, the comparatively lower ratio of 0.84 represented a 0.32 ratio in petroleum and 0.63 for groceries. In apparel industries, the ratio was a comparatively higher 1.96 and in chemicals it was 1.11.

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

Hidden Value: How Consumer Learning Boosts Output from the Federal Reserve Bank of Philadelphia is available here.

Wholesale Sector - NAICS Classification (%) Aug Jul Jun Y/Y 2013 2012 2011
Inventories 0.7 0.3 0.2 7.9 4.0 5.5 9.4
Sales -0.7 0.4 0.4 5,8 4.2 4.8 12.4
I/S Ratio 1.19 1.17 1.17 1.16 (Aug'13) 1.17 1.18 1.15
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