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Economy in Brief

U.S. Wholesale Sales Continue to Outpace Inventories in July
by Kathleen Stephansen, CBE  September 10, 2021

• Wholesale inventories eased in July.

• Nondurable sales leads strength in wholesale sales.

• The I/S ratio hits a multi-year low in July.

Wholesale inventories rose 0.6% m/m (11.5% y/y) in July, following a 1.2% m/m (10.6% y/y) rise in June. June's inventories were revised up slightly from a monthly rise of 1.1% (10.5% y/y). A 0.6% m/m gain had been expected in the Informa Global Markets Survey.

Durable goods inventories rose 1.0% m/m (10.8% y/y), following a 1.5% m/m (9.0% y/y) rise in June. Metals inventories led the gain with a 4.7% m/m rise, followed by a 2.4% m/m rise in inventories of lumber and a 2.1% m/m rise in furniture's inventories. Electric and electronic goods inventories rose 0.4% m/m. Motor vehicle inventories dropped 0.6% m/m, while computer equipment inventories declined 0.3% m/m.

Nondurable goods inventories declined 0.1% m/m (12.5% y/y), following a rise of 0.7% (13.2% y/y) in June, revised up from a 0.6% rise m/m (13.0% y/y). Inventories of alcoholic beverages rose 1.6% m/m and chemicals inventories rose 1.0% m/m. Other inventories categories posted monthly declines, such as apparel declining by 1.4% m/m, groceries dropping 0.2% m/m, farm products declining by 1.6% m/m, and petroleum products declining 1.7% m/m.

Wholesale sales rose 2.0% m/m (23.7% y/y) in July, following a 2.3% m/m (27.9% y/y) rise in June. The June rise was upwardly revised from 2.0% m/m (27.5% y/y). An increase of 0.8% was anticipated in the Action Economics Forecast Survey.

Durable goods sales gained 1.1% m/m (19.5% y/y) in July, following an unrevised gain of 1.2% m/m (24.8% y/y) in June. The July increase in sales was broad-based, led by a 6.0% m/m rise in metals sales, a 4.6% m/m rise in machinery sales, a 2.6% m/m rise in furniture sales and a 1.6% m/m rise in motor vehicle sales. Sales of computing equipment dropped 4.8% m/m, while lumber sales dropped 5.4% m/m.

Sales of nondurable goods rose 2.8% m/m (27.7% y/y), following a 3.4% m/m (30.9% y/y) rise in June. June sales were revised up from an initially reported gain of 2.9% m/m (30.2% y/y). Nondurable goods sales were led by increases in sales of petroleum products (6.4% m/m), drugs (4.7% m/m), paper products (3.4% m/m), and sales of alcoholic beverages (2.6% m/m). Apparel sales dropped 3.7% m/m.

With the rise in sales outpacing inventories, the inventory-to-sales ratio dropped to 1.20 in July from 1.22 in June. The July reading is the lowest since July 2014. The durable goods I/S ratio was unchanged at 1.49, while the nondurable I/S ratio edged down to 0.94 in July from 0.97 in June.

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 (%) Jul Jun May Jul Y/Y 2020 2019 2018
Inventories 0.6 1.2 1.3 11.5 -1.7 1.4 6.2
Sales 2.0 2.3 0.8 23.7 -4.8 -0.2 6.7
I/S Ratio 1.20 1.22 1.23 1.33 (Jul '20) 1.38 1.35 1.28
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