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Economy in Brief

Wholesale Inventories and Sales Decline Ahead of the Coronavirus
by Tom Moeller  April 9, 2020

Wholesale inventories fell 0.7% (-1.3% y/y) during February following a 0.6% decline in January, revised from -0.4%. The advance report issued on March 26 indicated a 2.2% inventory decline for February. A 0.5% fall had been expected in the Informa Global Markets Survey.

Inventories of both durable and nondurable goods fell. Durable goods inventories decreased 0.8% (-2.1% y/y) in February after a 0.6% January decline. The February decline was broad-based. Inventories of motor vehicles & parts dropped 1.9% (-2.5% y/y) while computing equipment inventories fell 3.2% (-11.1% y/y). Machinery inventories declined 0.4% (+1.1 y/y) and electrical goods inventories also eased 0.4% (-5.9% y/y). Inventories of nondurable goods fell 0.4% (0.0% y/y) in February after a 0.6% decline in January. Farm product inventories fell 3.8% (-6.8% y/y) while petroleum inventories were off 5.8% (-9.2% y/y) with lower prices. Grocery product inventories rose 1.4% (6.6% y/y).

Also falling at the wholesale level were sales by 0.8% (+1.1% y/y) after a 1.3% rise in January, revised from 1.6%. The Action Economics Forecast Survey expected a 0.4% decline.

The decline in sales was led by a 1.6% drop (+3.2% y/y) in nondurable goods which followed a 1.2% increase. It was paced by a 6.1% decline (+5.2% y/y) in petroleum sales. Apparel sales fell 0.8% (-8.0% y/y) and chemical sales were off 0.9% (-5.2% y/y). Durable goods sales were up 0.1% (-1.0% y/y) following a 1.4% rise. Motor vehicle sales gained 2.0% (-1.4% y/y) but computing equipment sales fell 3.7% (-2.4% y/y). Machinery sales improved 1.7% (1.8% y/y) while sales of furniture rose 0.9% (4.2% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level held steady at 1.31 in February. The durable goods I/S ratio fell to 1.67 and it was down from a March high of 1.73. The nondurable goods I/S ratio rose slightly to 0.99 but has been moving sideways since early last year.

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 (%) Feb Jan Dec Feb Y/Y 2019 2018 2017
Inventories -0.7 -0.6 -0.0 -1.3 1.7 6.5 3.0
Sales -0.8 1.3 -0.4 1.1 0.6 6.8 6.7
I/S Ratio 1.31 1.31 1.33 1.34 (Feb '19) 1.34 1.28 1.30
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