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.