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Economy in Brief

U.S. Wholesale Sales Outpace Inventories in June
by Sandy Batten  August 6, 2021

• Jump in overall sales led by sales of nondurable goods.

• Inventories post sixth consecutive monthly increase of 1% or more.

• Sales outpacing inventories led to decline in I/S ratio to nearly seven-year low.

Wholesale inventories increased 1.1% m/m (10.5% y/y) in June on top of an unrevised 1.3% m/m gain in May. A 0.8% m/m gain had been expected in the Informa Global Markets Survey.

Durable goods inventories rose 1.4% (8.9% y/y), the same monthly gain as in May. Inventories of lumber and other construction materials posted another strong monthly increase, rising 5.6% m/m in June on top of a 7.6% m/m jump in May. Electrical and electronic goods inventories rose 3.2% m/m after a 1.6% gain in May, and metals inventories gained 2.9% m/m, their third consecutive monthly gain in excess of 2%. Motor vehicle inventories fell 0.3% m/m in June, their first monthly decline in four months.

Growth of nondurable goods inventories slowed in June with nondurable inventories up 0.6% m/m (13.0% y/y) after a 1.2% m/m rise in May and a 1.7% monthly gain in April. Inventories rose in six of the nine major sectors, led by a 5.9% m/m jump in petroleum products inventories. Grocery inventories rose 2.5% m/m, chemicals inventories increased 1.8% m/m and paper inventories gained 1.7% m/m in June. By contrast, apparel inventories slumped 2.1% m/m and drug store and farm product inventories each declined 1.5% m/m.

Wholesale sales increased 2.0% m/m (27.5% y/y) in June after an unrevised 0.8% monthly gain in May. A 0.8% increase was anticipated in the Action Economics Forecast Survey.

Durable goods sales increased 1.2% m/m (24.8% y/y) in June following a slightly downwardly revised 1.6% m/m rise in May (originally 1.7% m/m). The June increase was led by 3.7% m/m rise in metals sales and a 2.2% m/m gain in machinery sales. Motor vehicle sales increased 1.5% m/m. Sales of computing equipment fell 1.6% m/m. Sales of nondurable goods jumped up 2.9% m/m (30.2% y/y), their first monthly gain in three months. Nondurable goods sales were led by a 7.2% m/m surge in sales of petroleum products, which reflected a more than 9% monthly rise in crude oil prices. Apparel sales posted a solid 2.8% m/m gain in June followed closely by a 2.7% m/m rise in grocery sales. Sales of alcoholic beverages edged down 0.3% m/m for their second consecutive monthly decline.

With the rise in sales outpacing inventories, the inventory-to-sales ratio edged down to 1.22 in June from 1.23 in May. The June reading tied that in March and April as the lowest since September 2014. The durable goods I/S ratio edged up to 1.49 in June from 1.48 in May. Still, the June reading is just one tick above the lowest reading in nearly a decade. The nondurable goods I/S ratio fell to 0.97 in June from 0.99 in May.

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 (%) Jun May Apr Jun Y/Y 2020 2019 2018
Inventories 1.1 1.3 1.1 10.5 -1.7 1.4 6.2
Sales 2.0 0.8 1.1 27.5 -4.8 -0.2 6.7
I/S Ratio 1.22 1.23 1.22 1.41 (Jun '20) 1.38 1.35 1.28
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