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Economy in Brief

U.S. Wholesale Inventories Increase as Sales Edge Higher
by Tom Moeller  July 10, 2019

Wholesale inventories increased 0.4% (7.7% y/y) during May following an unrevised 0.8% April gain. A 0.4% rise was expected in the Informa Global Markets Survey.

Durable goods inventories increased 0.3% (10.8% y/y) in May after a 0.9% rise in April. Machinery inventories, the largest sector, grew 0.6% (12.9% y/y), while vehicle inventories, the second largest group, advanced 1.8% (17.0% y/y). Electrical equipment inventories fell 1.8% (+6.7% y/y). Inventories of nondurable goods gained 0.5% (2.9% y/y) after rising 0.7% in April. Drug inventories, which make up a quarter of nondurable inventories, were little changed (4.3% y/y). Apparel inventories fell 0.6% (+12.6% y/y) and inventories of chemicals rose 0.5% (5.0% y/y). Petroleum inventories fell 2.8% (-11.1% y/y).

Wholesale sales rose 0.1% during May (-0.1% y/y) following a 0.4% decline. The Action Economics Forecast Survey called for stability.

Durable goods sales rose 0.6% both m/m and y/y, after a 1.0% decline in April. Electrical equipment sales, the largest sector, rebounded 0.8% (-0.9% y/y) after a 2.9% shortfall. Professional and commercial equipment shipments, which includes computers, rose 0.7% (0.4% y/y) following a 1.6% drop. Motor vehicle sales surged 3.2% (4.4% y/y). Nondurable product sales fell 0.4% (-0.6% y/y) after a 0.1% uptick. Petroleum products deliveries declined 1.0% (2.8% y/y) with lower prices. Drug sales, which are nearly the largest category of nondurable sales, rose 1.1% (3.9% y/y) while apparel sales declined 3.1% (-2.8% y/y). Chemical shipments rose 1.8% (3.7% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level edged up to 1.35 and equaled the highest level in three years. The durable goods I/S ratio held steady at 1.75, the highest level since 2009. The machinery ratio rose to 2.72, while motor vehicles eased to 1.76, nearly a ten-year high. The I/S ratio for nondurable goods edged up to 0.98. The paper industry I/S ratio held at a record 1.20 while the petroleum industry I/S ratio eased to 0.33. The drug industry I/S ratio slipped to 1.08 while the chemical industry ratio fell to 1.13.

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.

Semiannual Monetary Policy Report to the Congress from Federal Reserve Chair Jerome H. Powell is available here.

Wholesale Sector - NAICS Classification (%) May Apr Mar May Y/Y 2018 2017 2016
Inventories 0.4 0.8 -0.0 7.7 7.1 3.3 1.9
Sales 0.1 -0.4 1.8 -0.1 6.8 6.3 -1.2
I/S Ratio 1.35 1.34 1.33 1.26 (May '18) 1.29 1.30 1.35
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