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Economy in Brief

U.S. Wholesale Inventories Fall as Sales Surge
by Tom Moeller  July 9, 2020

• Wholesale inventory decline is broad-based.

• Sales spike is notable in durables sector

• Inventory to sales ratio remains elevated.

Wholesale inventories fell 1.2% (-4.2% y/y) as durable goods inventories slid 2.0% (-5.1% y/y). The decline was paced by a 5.1% decline (-10.5% y/y) in motor vehicles inventories. Machinery inventories also fell 2.3% (-3.1% y/y) and electrical goods inventories eased 0.1% (-5.3% y/y). Inventories of nondurable goods edged 0.1% higher (-2.8% y/y) as petroleum inventories strengthened 14.4% (-24.8% y/y) with the upturn in prices. Chemical inventories gained 1.3% (-6.6% y/y) and farm product inventories fell 1.8% (-15.4% y/y). The value of paper inventories declined 1.3% (+2.8% y/y).

Wholesale sales rebounded 5.4% (-16.2% y/y) following three straight months of significant declines. Sales of durable goods jumped 9.3% (-13.4% y/y) led by a 23.4% strengthening (-29.4% y/y) in motor vehicle sales. Sales of furniture gained 22.8% (-15.0% y/y) and professional & computer equipment sales improved 3.4% (-10.4% y/y). Sales of nondurable goods rose 1.8% (-18.8% y/y) as chemical sales increased 3.2% (-20.0% y/y). Apparel sales improved 44.5% but were off 47.7% y/y. Petroleum sales weakened 1.8% (-54.6% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level fell to 1.53 in May after jumping to a record high of 1.63 in April (data begin in 1980). Both the durable goods (1.87) and non-durables (1.20) I/S ratios retraced pieces of the April upturns, but remained near record levels. The sector data extend back to 1992.

The wholesale trade figures, industrial production 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 (%) May Apr Mar May Y/Y 2019 2018 2017
Inventories -1.2 0.2 -1.1 -4.2 1.7 6.5 3.0
Sales 5.4 -16.4 -5.1 -16.2 0.6 6.8 6.7
I/S Ratio 1.53 1.63 1.36 1.34 (May '19) 1.34 1.28 1.30
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