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Economy in Brief

U.S. Wholesale Inventories Ease While Sales Strengthen
by Tom Moeller  May 9, 2019

Wholesale inventories slipped 0.1% (+6.7% y/y) during March following a 0.4% gain in February. The Informa Global Markets Survey expected no change.

Durable goods inventories increased 0.3% (10.0% y/y) after a 0.2% gain. Machinery inventories, the largest sector, grew 1.2% (13.5% y/y), but motor vehicle inventories fell 0.9% (+8.3% y/y). Electrical equipment inventories rose 0.2% (9.0% y/y). Inventories of nondurable goods declined 0.6% (+1.7% y/y) after rising 0.7% in February. Drug inventories, which make up one-quarter of nondurable inventories, declined 3.2% (+2.2% y/y) and reversed February's rise. Groceries, the second largest category, gained 0.3% (1.8% y/y). Apparel inventories increased 1.7% (13.4% y/y) and petroleum inventories gained 0.1% (-7.4% y/y).

Wholesale sales jumped 2.3% during March (3.9% y/y) after a 0.3% increase. A 0.7% rise had been expected in the Action Economics Forecast Survey.

Nondurable product sales strengthened 3.1% (4.3% y/y) following two months of 0.9% increase. Petroleum product sales surged 9.4% (12.0% y/y) with higher prices. Drug purchases grew 0.5% (5.7% y/y) and apparel sales rose 0.4% (-3.2% y/y). Chemical sales weakened 3.0% (-0.9% y/y). Durable goods sales rose 1.4% (3.4% y/y) after a 0.3% decline. Electrical equipment sales, the largest sector, surged 3.2% (-2.3% y/y) following declines in five of the prior six months. Professional and commercial equipment, which includes computers, rose 1.4% (6.7% y/y). Vehicle sales improved 0.2% (3.4% y/y).

The inventory-to-sales (I/S) ratio fell to 1.32, the lowest level in four months. The I/S ratio for nondurable goods declined to 0.96 as the petroleum industry's I/S ratio fell to 0.33. The apparel industry I/S ratio reached 2.24, a new high for the expansion. The chemical industry ratio rose to 1.18, matching the highest level in nearly two years. The I/S ratio for durable goods was unchanged at 1.70, nearly the highest level since early-2016. The machinery ratio rose to 2.73 but motor vehicles eased to 1.70. The computer equipment I/S ratio declined to  1.90.

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 (%) Mar Feb Jan Mar Y/Y 2018 2017 2016
Inventories -0.1 0.4 1.2 6.7 7.1 3.3 1.9
Sales 2.3 0.3 0.5 3.9 6.5 6.7 -1.3
I/S Ratio 1.32 1.35 1.35 1.29 (Mar '18) 1.28 1.29 1.35
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