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Economy in Brief

U.S. Wholesale Inventories Rise Steadily as Sales Stabilize
by Tom Moeller  October 9, 2019

Wholesale inventories increased 0.2% during August (6.2% y/y), the same as in July. A 0.4% rise had been expected in the Informa Global Markets Survey.

Durable goods inventories rose 0.3% (8.3% y/y) in August after holding steady in July. Machinery inventories, the largest sector, rose 0.9% (11.1% y/y), while motor vehicle inventories, the second largest group, edged 0.1% higher (14.8% y/y). Electrical equipment inventories rose 0.3% (5.8% y/y). Inventories of nondurable goods ticked up 0.1% (2.9% y/y) after a 0.4% rise. Drug inventories, which make up a quarter of nondurable inventories, increased 0.9% (3.1% y/y). Apparel inventories increased 1.2% (13.3% y/y) after falling for four straight months. Inventories of chemicals declined 3.1% (-4.6% y/y) and the value of petroleum inventories fell 4.5% (-9.5% y/y).

Wholesale sales held steady (-0.7% y/y) after a 0.2% rise. The Action Economics Forecast Survey called for a 0.3% rise.

Durable goods sales rose 0.3% (-1.6% y/y) after two months of decline. Electrical equipment sales, the largest sector, rose 1.2% (-7.4% y/y) after falling for four straight months. Professional and commercial equipment shipments, which includes computers, fell 1.2% (+0.7% y/y). Motor vehicle sales improved 0.8% (4.7% y/y). Nondurable product sales declined 0.3% (+0.3% y/y). Drug sales, which are nearly the largest category of nondurable sales, eased 0.2% (+4.2% y/y) while apparel sales declined 5.1% (-10.0% y/y), off for four consecutive months. Chemical shipments increased 3.3% (2.9% y/y) but grocery product sales slipped 0.2% (+4.2% y/y). Petroleum product deliveries eased 0.1% (-7.8% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level held steady at a heightened 1.36 for the fourth consecutive month.

The durable goods I/S ratio was steady at 1.77, the highest level since 2009. The machinery ratio rose to 2.82, while motor vehicles eased to 1.76, nearly a ten-year high. The I/S ratio for nondurable goods was fairly steady at 0.99. The paper industry I/S ratio rose to a record 1.26. The drug industry I/S ratio remained low at 1.08, while the chemical industry ratio eased to 1.07. The petroleum industry I/S ratio was little changed at 0.35.

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 (%) Aug July June Aug Y/Y 2018 2017 2016
Inventories 0.2 0.2 -0.1 6.2 7.1 3.3 1.9
Sales 0.0 0.2 -0.3 -0.7 6.8 6.3 -1.2
I/S Ratio 1.36 1.36 1.36 1.27 (July '18) 1.29 1.30 1.35
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