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Economy in Brief

U.S. Wholesale Inventories Edge Up While Sales Slump
by Sandy Batten  December 6, 2019

Wholesale inventories edged up 0.1% m/m (+3.8% y/y) in October after a downwardly revised 0.7% m/m drop in September (originally -0.4%). The Informa Global Markets Survey had looked for a 0.2% m/m increase. Wholesale sales unexpectedly slumped 0.7% m/m (-1.4% y/y) in October. This was their third consecutive monthly decline. The Action Economics Forecast Survey had expected a 0.2% m/m increase. The inventory-to-sales (I/S) ratio at the wholesale level increased to 1.37 in October from 1.36 in September, the first change in the past five months.

In the details, durable goods inventories eased 0.3% (+4.7% y/y) in October, the same monthly decline as in September. The decline was widely spread across categories with only inventories of electrical and electronic goods (+0.2% m/m) and inventories of hardware and plumbing and heating equipment (+0.4% m/m) posting monthly gains. Machinery inventories, the largest component, were unchanged in October. In contrast, inventories of nondurable goods rose 0.7% m/m (+2.4% y/y) in October, led by a 4.2% m/m jump and inventories of drugs and a 1.7% m/m rise in grocery inventories. Nondurables inventories had fallen 1.3% m/m in September.

Durable goods sales fell 0.6% m/m (-1.9% y/y) in October, their fourth monthly decline in the past five months, with declines widely spread across categories. The largest declines were in metals (-1.6% m/m) and hardware (-1.8% m/m). Nondurable product sales fell 0.9% m/m (-0.8% y/y) in October for their third consecutive monthly decline. Chemical shipments were up 1.9% m/m while shipments of farm products collapsed 10.6% m/m on top of a 7.9% m/m decline in September.

The durable goods I/S ratio was unchanged at 1.77 for the fourth consecutive month, the highest level since 2009. The machinery ratio eased to 2.80 from 2.81, and the motor vehicles I/S ratio receded to 1.78 in October from an expansion high of 1.80 in September. The I/S ratio for nondurable goods rose to 0.99 in October from 0.97. The petroleum industry I/S ratio slipped from 0.35 to 0.33, tying its lowest reading since November 2014.

The wholesale trade figures 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 (%) Oct Sep Aug Oct Y/Y 2018 2017 2016
Inventories 0.1 -0.7 0.1 3.8 7.1 3.3 1.9
Sales -0.7 -0.1 -0.1 -1.4 6.8 6.3 -1.2
I/S Ratio 1.37 1.36 1.36 1.30 (Oct '18) 1.29 1.30 1.35
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