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Economy in Brief
U.S. Durable Goods Report: Strong Headline, Weaker Details
New orders for durable goods increased 1.2% (3.5% year-on-year) during December following an upwardly-revised 1.0% gain...
U.S. Existing Home Sales Continue to Slide
The National Association of Realtors reported that sales of existing homes fell a greater-than-expected 1.2% in January...
Philadelphia Fed Manufacturing Index Tumbles in February
The Philadelphia Federal Reserve reported manufacturing conditions weakened considerably in February with its General Factory Sector Business Conditions Index...
U.S. Initial Claims for Unemployment Insurance Decline
Initial claims for unemployment insurance fell to 216,000 in the week ended February 16, down 23,000 from the previous week's...
EMU PMIs Continue to Move Together...Mostly Lower
The composite EMU German and French indices all rose by small amounts...
by Tom Moeller November 9, 2017
Inventories at the wholesale level increased 0.3% during September (4.6% y/y) following a 0.8% August gain, revised from 0.9%. During the last three months, inventories have risen at a 7.5% annual rate, up from little change January through March.
Nondurable goods inventories rose 0.4% (2.9% y/y) paced by a 3.0% increase (4.7% y/y) in inventories of petroleum. Chemical inventories also strengthened 1.1% (3.1% y/y). These gains were accompanied by a 0.2% increase (-5.8% y/y) in apparel inventories and a 0.2% decline (+11.4% y/y) in farm product inventories. Durable goods inventories increased 0.3% (5.7% y/y) reflecting a 1.0% strengthening (11.1% y/y) in electrical equipment inventories. Machinery inventories rose 0.2% (+0.3% y/y). These increases were offset by a 2.5% decline (+7.7% y/y) in computer & related equipment inventories and a 0.3% easing (+7.8% y/y) in automotive inventories.
Sales at the wholesale level increased 1.3% (5.5% y/y), also led by the petroleum sector where sales strengthened 12.6% (29.9% y/y). A 1.0% rise had been expected in the Action Economics Forecast Survey.
Higher oil prices pumped up the gain in nondurable goods sales to 1.8% (4.7% y/y). Chemical sales also were strong showing a 1.7% rise (+5.2% y/y). Elsewhere in the nondurable goods sector, there was weakness. Paper & paper product sales fell 3.8% (-4.9% y/y), the largest of three straight monthly declines. Grocery product sales fell 1.5% (-1.1% y/y) and apparel sales eased 0.2% (-8.2% y/y). Sales of durable goods offset these declines with a 0.7% rise (6.2% y/y). It was led by a 3.4% increase (17.6% y/y) in metals sales and a 1.6% gain (7.6% y/y) in electrical equipment sales. Motor vehicle shipments rose 0.7% (0.0% y/y) while furniture sales declined 0.3% (-5.0% y/y), off for the seventh month this year.
The inventory-to-sales ratio at the wholesale level eased to 1.27, its lowest point since December 2014 and down from a February 2016 high of 1.36.
The I/S ratio in the nondurable goods sector declined to 0.95, down from the 2016 high of 1.03. It as led by a collapse in the petroleum sector where the ratio of 0.36 compared to a 2016 high of 0.54. The apparel I/S ratio fell to 2.04 from the February 2017 high of 2.17. The chemical sector's I/S ratio fell to 1.15 from the 2016 high of 1.26. The I/S ratio in the durable goods sector eased to 1.62 from 1.74 in January 2016. The machinery I/S ratio fell to 2.83 from a 2016 high of 3.16 and the motor vehicle ratio fell to 1.74 from a July 2016 high of 1.89. The electrical equipment I/S ratio eased to 1.00 versus the March 2015 high of 1.07.
The wholesale trade figures are available in Haver's USECON database. The Action Economic Survey results are contained in AS1REPNA.
Wholesale Sector - NAICS Classification (%) | Sep | Aug | Jul | Sep Y/Y | 2016 | 2015 | 2014 |
---|---|---|---|---|---|---|---|
Inventories | 0.3 | 0.8 | 0.6 | 4.6 | 2.6 | 1.1 | 5.8 |
Sales | 1.3 | 1.9 | 0.0 | 5.5 | -0.4 | -4.9 | 3.6 |
I/S Ratio | 1.27 | 1.28 | 1.29 | 1.32 (Sep. '16) | 1.33 | 1.32 | 1.21 |