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Economy in Brief

U.S. Wholesale Inventories Decline While Sales Hold Steady
by Tom Moeller  November 8, 2019

Wholesale inventories fell 0.4% during September (+4.8% y/y) following a 0.1% August gain, revised from 0.2%. A 0.3% decline had been expected in the Informa Global Markets Survey.

Durable goods inventories eased 0.1% (+6.9% y/y) in September after a 0.2% August rise. Machinery inventories, the largest sector, rose 0.3% (10.1% y/y), while motor vehicle inventories, the second largest group, fell 1.2% (+10.7% y/y). Electrical equipment inventories eased slightly (+3.9% y/y). Inventories of nondurable goods declined 0.9% (+1.6% y/y) after a 0.1% slip. Drug inventories, which make up a quarter of nondurable inventories, decreased 2.2% (+1.4% y/y). Apparel inventories increased 0.4% (12.1% y/y) after falling in four of the prior five months. Inventories of chemicals rose 0.4% (-2.1% y/y), and the value of petroleum inventories fell 2.0% (-17.0% y/y).

Wholesale sales were unchanged (-0.6% y/y) in September after slipping 0.1% in August. The Action Economics Forecast Survey called for a 0.2% rise.

Durable goods sales rose 0.1% (-1.4% y/y) after a 0.2% gain. Electrical equipment sales, the largest sector, fell 0.5% (-7.4% y/y). Professional and commercial equipment shipments, which includes computers, increased 2.1% (4.9% y/y). Motor vehicle sales fell 3.1% (+0.6% y/y). Nondurable product sales were little changed (0.1% y/y). Drug sales, which are nearly the largest category of nondurable sales, rose 1.3% (4.8% y/y) while apparel sales rose 2.0% (-5.8% y/y). Chemical shipments decreased 2.2% (-3.3% y/y) while grocery product sales improved 0.2% (+4.7% y/y). Petroleum product deliveries eased 0.5% (-9.1% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.36 in September for the fifth consecutive month.

The durable goods I/S ratio was steady at 1.77 for the third consecutive month, the highest level since 2009. The machinery ratio eased to 2.81, while motor vehicles rose to an expansion high of 1.80. The I/S ratio for nondurable goods eased to 0.98. The paper industry I/S ratio held at the record 1.27. The drug industry I/S ratio fell to a six-year low of 1.04, while the chemical industry ratio rose slightly to 1.14. The petroleum industry I/S ratio was unchanged 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 (%) Sep Aug July Sep Y/Y 2018 2017 2016
Inventories -0.4 0.1 0.2 4.8 7.1 3.3 1.9
Sales 0.0 -0.1 0.2 -0.6 6.8 6.3 -1.2
I/S Ratio 1.36 1.36 1.36 1.29 (Sep '18) 1.29 1.30 1.35
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