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Economy in Brief
U.S. Mortgage Applications Continued to Rise, but only Slightly
The Mortgage Bankers Association reported that mortgage applications edged up 0.7% w/w...
Globally Money Supply Slows or Contracts in Real Terms
Money supply trends show that slowing is widespread across the major monetary center countries...
U.S. Consumer Confidence Deteriorates Further in June
The Conference Board's Consumer Confidence Index weakened 4.4% (-23.4% y/y) in June...
U.S. FHFA House Prices Continued to Rise in April
The FHFA House Price Index increased 1.6% during April...
U.S. Advance Trade Deficit Narrowed Slightly in May
The advance estimate of the U.S. international trade deficit in goods narrowed to $104.3 billion in May...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Gerald D. Cohen November 6, 2020
• Inventories increased 0.4% while sales ticked up 0.1% in September.
• Wholesale inventory-to-sales ratio unchanged at 1.31.
Wholesale inventories grew a greater-than-expected 0.4% in September (-3.9% year-over-year). The Informa Global Markets Survey anticipated a 0.1% contraction. Wholesale inventory swings can have a meaningful impact on GDP. In the latest GDP report, third quarter inventory rebuild added 6.62 percentage points (ppt) to GDP; however, that was small relative to the 25.27 ppt contribution from the jump in consumption.
Durable goods inventories rose 0.1% (-6.4% y/y) with automotive, the largest, declining 0.3% (-7.1% y/y). Electrical equipment, the second largest fell 0.5% (-4.2% y/y). Nondurables increased 0.7% (0.2% y/y). Drug inventories, which make up over a quarter of nondurable inventories, grew 1.6% (12.6% y/y). Groceries, the second largest category, decreased 0.4% (+2.3% y/y).
Wholesale sales edged up a smaller-than-expected 0.1% during September (-2.3% y/y). The Action Economics Forecast Survey anticipated a 1.1% rise. Durable goods sales increased 0.7% (0.2% y/y) as auto sales accelerated 3.5% (4.3% y/y). Nondurable wholesales decreased 0.5% (-4.7%) as petroleum products dropped 5.0% (-31.4% y/y), likely the result of a 6.5% decline in seasonally adjusted increase oil prices (-30.5% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level was unchanged at 1.31 in September. After hitting a record 1.63 in April -- data goes back to 1980 -- it is back to pre-COVID-19 levels. The durable goods ratio declined to 1.60 from 1.61. the lowest in two years. Meanwhile, the nondurable I/S ratio remains elevated at 1.04, though down meaningfully from April's 1.22 record. The durable and nondurable series go back to 1992.
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 | Jul | Sep Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Inventories | 0.4 | 0.5 | -0.2 | -3.9 | 1.7 | 6.5 | 3.0 |
Sales | 0.1 | 1.2 | 4.8 | -2.3 | 0.6 | 6.8 | 6.7 |
I/S Ratio | 1.31 | 1.31 | 1.32 | 1.33 (Sep '19) | 1.34 | 1.28 | 1.30 |