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Economy in Brief

U.S. Wholesale Inventories Ease While Sales Continue to Recover in July
by Tom Moeller  September 10, 2020

• Wholesale inventories drop for third straight month.

• Sales continue to surge.

• Inventory-to-sales ratio falls with sales' strength.

Wholesale inventories worked lower again, falling 0.3% during July (-5.6% y/y) and continuing this year's pattern of decline. The Informa Global Markets Survey anticipated a 0.1% slip. Durable goods inventories fell 0.9% (-7.5% y/y) as furniture & home furnishing inventories dropped 3.0% (-16.3% y/y). Motor vehicle & parts inventories fell 0.6% (-12.9% y/y) but electrical product inventories rose 1.0% (-3.3% y/y). Nondurable goods inventories rose 0.6% (-2.6% y/y). Grocery inventories increased 0.5% (3.5% y/y) while the value of petroleum inventories jumped 2.9% (-17.1% y/y) with higher prices. Apparel inventories weakened 4.7% (-7.5% y/y) following a 6.1% drop.

Wholesale sales grew 4.6% during July (-4.0% y/y) following two months of recovery from the recession. The Action Economics Forecast Survey anticipated a 2.8% rise. Durable goods sales increased 4.2% (-1.1% y/y) as auto sales jumped 9.4% (-3.0% y/y) and furniture & home furnishings sales rose 8.5% (-9.0% y/y). Nondurable wholesale sales gained 5.0% (-6.7%) as purchases of petroleum products surged 17.3% (-30.4% y/y). Apparel sales rose 8.5% (-19.5% y/y) and chemical sales gained 2.6% (-9.5% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level declined to 1.32 in July from 1.38 in June, and was below a record 1.63 in April (data goes back to 1980). The durable goods ratio fell to 1.61 and was below the high of 2.09 in April. It reflected widespread declines across industries. The nondurable ratio also fell sharply to 1.04 and reflected widespread industry declines.

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 (%) Jul Jun May Jul Y/Y 2019 2018 2017
Inventories -0.3 -1.3 -1.2 -5.6 1.7 6.5 3.0
Sales 4.6 9.0 5.7 -4.0 0.6 6.8 6.7
I/S Ratio 1.32 1.38 1.53 1.34 (Jul '19) 1.34 1.28 1.30
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