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Economy in Brief

U.S. Wholesale Inventories Steady; Sales Decline
by Tom Moeller  August 8, 2019

Wholesale inventories were unchanged (7.6% y/y) during June following an unrevised 0.4% May increase. A 0.2% rise was expected in the Informa Global Markets Survey.

Durable goods inventories increased 0.3% (10.1% y/y) in June after remaining unchanged in May. Machinery inventories, the largest sector, grew 0.7% (12.4% y/y), while vehicle inventories, the second largest group, eased 0.2% (+17.2% y/y). Electrical equipment inventories rose 0.3% (6.2% y/y). Inventories of nondurable goods fell 0.4% (+3.6% y/y) after a 0.6% increase. Drug inventories, which make up a quarter of nondurable inventories, fell 2.1% (+1.8% y/y). Apparel inventories declined 0.5% (+12.8% y/y) and inventories of chemicals were off 1.2% (+2.8% y/y). The value of petroleum inventories rose 2.2% (-7.6% y/y).

Wholesale sales edged 0.3% lower in June (-2.7% y/y) following declines during the two preceding months. The Action Economics Forecast Survey expected a 0.2% increase.

Durable goods sales rose 0.2% (-2.3% y/y) after holding steady in May. Electrical equipment sales, the largest sector, fell 0.9% (-6.7% y/y). Professional and commercial equipment shipments, which includes computers, rose 0.9% (1.1% y/y). Motor vehicle sales eased 0.2% (+1.7% y/y). Nondurable product sales fell 0.7% (-3.1% y/y) after a 1.2% decline. Drug sales, which are nearly the largest category of nondurable sales, fell 0.4% (-0.6% y/y) while apparel sales declined 3.1% (-10.3% y/y). Chemical shipments were off 1.2% (-3.5% y/y) but grocery product sales rose 0.5% (2.1% y/y). Petroleum products deliveries declined 2.3% (7.8% y/y), the third straight monthly fall.

The inventory-to-sales (I/S) ratio at the wholesale level was unchanged at 1.36, the highest in just over three years.

The durable goods I/S ratio increased to 1.76, the highest level since 2009. The machinery ratio rose to 2.75, while motor vehicles held steady at 1.77, nearly a ten-year high. The I/S ratio for nondurable goods was unchanged at 0.99. The paper industry I/S ratio rose to a record 1.23. The drug industry I/S ratio slipped to 1.06 while the chemical industry ratio held steady at 1.13. The petroleum industry I/S ratio gained to 0.36.

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 (%) Jun May Apr Jun Y/Y 2018 2017 2016
Inventories 0.0 0.4 0.8 7.6 7.1 3.3 1.9
Sales -0.3 -0.6 -0.4 -2.7 6.8 6.3 -1.2
I/S Ratio 1.36 1.36 1.34 1.26 (Jun '18) 1.29 1.30 1.35
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