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Economy in Brief
Philadelphia Fed Manufacturing Index Jumps in January
The Federal Reserve Bank of Philadelphia Factory Sector Business Conditions Index jumped to January to 26.5...
U.S. Initial Jobless Claims Ease, but Are Still High
Initial claims for unemployment insurance fell to 900,000 in the week ended January 16...
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The spread of the virus in Franc is still untamed...
U.S. Home Builder Sentiment Slips in January
The Composite Housing Market Index from the NAHB-Wells Fargo declined 3.5% m/m (+10.7% y/y) in January...
Decline in Refinancing Drags Down U.S. Mortgage Applications
The MBA Mortgage Loan Applications Index fell 1.9% w/w (+56.2% y/y) in the weekend January 15...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Gerald D. Cohen March 22, 2019
Wholesale inventories increased 1.2% month-on-month (7.7% year-over-year) during January following a 1.1% gain in December (this report was delayed as a result of the government shutdown). The Informa Global Markets Survey expected a 0.2% rise. Wholesale inventory swings can have a meaningful impact on GDP. In the second and third quarters of 2018 changes in inventories subtracted 1.2 percentage points and then added 2.3 ppt respectively. In Q4, inventories provided just a 0.1 percentage point boost.
Durable goods inventories increased 0.9% (11.7% y/y) in January after a 1.7% gain. Machinery inventories, the largest sector, grew 1.0% (13.7% y/y), while vehicles, the second largest, advanced 1.4% (9.5% y/y). Electrical equipment was up 3.0% (9.8% y/y). Inventories of nondurable goods gained 1.6% (1.8% y/y) after edging up 0.1% in December. Drug inventories, which make up a quarter of nondurable inventories, rose 1.3% (-2.7% y/y). Groceries, the second largest category, ticked up 0.2% (1.8% y/y). Miscellaneous nondurables increased 1.3% (7.6% y/y).
Wholesale sales grew 0.5% during January (2.7% y/y) after a 0.9% drop. The Action Economics Forecast Survey looked for a 0.4% gain.
Durable goods sales were unchanged (4.7% y/y) after a 0.6% increase. Electrical equipment, the largest sector, fell 2.1% (+2.7% y/y). Professional and commercial equipment, which includes computers, declined 0.5% (+0.6% y/y). These decreases were somewhat offset by a 2.5% jump in wholesale vehicle sales (3.3% y/y). Nondurable product sales rose 0.9% (0.9% y/y) after dropping 2.3%. Petroleum products increased 1.1% after 10.9% drop in December (-6.2% y/y). Oil prices fell at end of last year, but have slowly increased since. Drug sales, which are now the largest category as a result of the decline in petroleum prices, grew 0.6% (4.9% y/y) while groceries gained 1.0% (3.8% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level rose to 1.34, the fifth consecutive gain. The I/S ratio for durable goods increased to 1.69, the highest level in two-and-a-half years. The machinery ratio grew to 2.66 while motor vehicles declined to 1.70. The I/S ratio for nondurable goods increased to 1.0. The petroleum industry I/S ratio picked up to 0.41 after reaching a four-year low of 0.35 in November. The drug industry I/S rose to 1.05 after hitting a five-and-a-half-year low of 1.04 in December.
The wholesale trade figures and oil prices are available in Haver's USECON database. The expectations figure for inventories is contained in the MMSAMER database. Expectations for sales are in the AS1REPNA database.
Wholesale Sector - NAICS Classification (%) | Jan | Dec | Nov | Y/Y | 2018 | 2017 | 2016 |
---|---|---|---|---|---|---|---|
Inventories | 1.2 | 1.1 | 0.4 | 7.7 | 7.3 | 3.4 | 2.2 |
Sales | 0.5 | -0.9 | -1.2 | 2.7 | 7.2 | 7.4 | -1.3 |
I/S Ratio | 1.34 | 1.33 | 1.30 | 1.28 (Jan '18) | 1.28 | 1.29 | 1.35 |