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Economy in Brief

U.S. Wholesale Inventory Accumulation Strengthens
by Tom Moeller  July 10, 2015

Inventories at the wholesale level increased 0.8% during May (5.0% y/y) following an unrevised 0.4% April gain. The rise was paced by a 4.4% jump (-16.7% y/y) in petroleum inventories which followed a 3.1% April increase. There also was strength in other nondurable industries. Drugs & druggist sundries inventories gained 2.7% (16.1% y/y) and chemical inventories rose 1.4% (1.8% y/y). These gains were offset by a 1.9% drop (+1.9% y/y) in paper inventories. Durable product inventories gained 0.6% (6.2% y/y) led by a 2.5% jump (7.5% y/y) in computer equipment. Automotive product inventories increased 1.2% (12.2% y/y) and furniture inventories gained 0.4% (6.8% y/y). Electrical equipment inventories rose 0.3% (6.9% y/y) while metals inventories improved 0.2% (4.2% y/y).

Wholesale sales continued to loose steam as a 0.3% increase (-3.8% y/y) followed a 1.7% April jump. A 4.3% increase (-32.5% y/y) in petroleum sales was accompanied by a 1.1% rise in paper products. These gains were offset as chemical sales declined 1.0% (-8.0% y/y) and apparel sales were off 1.2% (+1.1% y/y). Durable goods sales eased 0.1% (+1.6% y/y) as a 2.8% decline in furniture sales (+7.4% y/y) was offset by a 2.2% rise (9.4% y/y) in motor vehicles. Machinery sales improved 0.4% (-0.1% y/y) but computer equipment sales eased 1.0% (-2.9% y/y).

The inventory to sales ratio amongst wholesalers held steady m/m at 1.29 but that was up from 1.19 one year earlier. Motor vehicles ratio rose to 1.64 from 1.60 last May and computers jumped to a recovery high of 0.85 from 0.77 last year. The I/S ratio in the metals sector increased to 2.32 from 1.98 twelve months earlier but the ratio in furniture held steady y/y at 1.62. In the nondurable goods sector, the I/S ratio remained quite high at 0.95, up from 0.85 last May. The petroleum ratio was 0.43 compared to 0.35 and apparel jumped to 2.01 from 1.85 in May 2014.

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

Wholesale Sector - NAICS Classification (%) May Apr Mar Y/Y 2014 2013 2012
Inventories 0.8 0.4 0.2 5.0 6.7 4.2 6.6
Sales 0.3 1.7 -0.3 -3.8 4.3 3.1 5.9
I/S Ratio 1.29 1.29 1.30 1.19 (May '14) 1.20 1.18 1.16
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