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Economy in Brief

U.S. Wholesale Sales Posted a Surprise Decline in August
by Kathleen Stephansen, CBE  October 8, 2021

• Wholesale inventories continue to rise.

• Wholesale sales declined in August, with sales declines in both durable and non-durable goods.

• The I/S ratio rose in August from the July multi-year low.

Wholesale inventories rose 1.2% m/m (12.3% y/y) in August, following an unrevised gain of 0.6% m/m (11.5% y/y) rise in July. A 1.2% m/m gain had been expected in the Informa Global Markets Survey.

Durable goods inventories rose 1.2% (11.7% y/y), following 1.2% m/m (11.0% y/y) gain in July, revised up from a 1.0% gain. Metals inventories led the gain with a 3.7% m/m rise, followed by a 3.6% m/m rise in computer equipment inventories and a 2.9% m/m rise in lumber inventories. Hardware inventories rose 2.0% m/m and electric and electronic goods inventories rose 1.5% m/m. Other inventory components such as miscellaneous durables, machinery, and professional equipment posted respective monthly gains of 0.9%, 0.8% and 0.7%. Both motor vehicle and furniture inventories dropped 0.1% m/m.

Nondurable goods inventories rose 1.1% m/m (13.2% y/y), after a decline of 0.3% m/m (12.4% y/y) in July, revised from a decline of 0.1% m/m (12.5% y/y). Inventories of petroleum products rose a sharp 4.7% m/m, followed by monthly rises of chemicals inventories (2.9%), apparel inventories (2.7%), groceries (2.1%), alcoholic beverages (1.3%), miscellaneous non-durables (1.3%) and paper products (0.7%). Other inventories categories such as drugs and farm products posted monthly declines of 0.3% and 1.8%, respectively.

Wholesale sales declined 1.1% m/m (20.6% y/y), following a rise of 2.1% m/m (23.8% y/y) in July. The July rise was revised up slightly from 2.0% m/m (23.7% y/y). A rise of 1.1% was anticipated in the Action Economics Forecast Survey.

Durable goods sales declined by 0.5% (17.6% y/y), following an unrevised gain of 1.1% m/m (19.5% y/y) in July. Monthly sales declines occurred in hardware products (-0.1%), in lumber (-.05%), electric and electronic goods (-0.8%), in machinery sales (-2.6%), motor vehicle sales (-2.8%) and in furniture sales (-2.9%). Monthly increase in sales were led by a 4.2% m/m rise in computing equipment sales, a 3.3% m/m rise in professional equipment, a 0.9% m/m in metals sales, and a 0.2% m/m in miscellaneous durable sales.

Sales of nondurable goods declined 1.7% m/m (23.4% y/y), following an upwardly revised 3.1% m/m (28.1% y/y) rise in July, from an initially reported gain of 2.8% m/m (27.7% y/y). Nondurable goods sales were led by declines in drugs sales (-6.1% m/m), petroleum products ( -3.0% m/m), apparel sales (-1.4% m/m), alcoholic beverages (-0.2% m/m) and farm products (-0.2% m/m). Sales rose for chemicals (3.9% m/m), paper products (1.5% m/m), and sales of groceries (1.3% m/m).

With inventories outpacing sales during August, the inventory-to-sales ratio rose to1.23 from 1.20 in July. The July reading was the lowest since July 2014. The durable goods I/S ratio rose to 1.52 in August from 1.49 in July, while the nondurable I/S ratio edged up to 0.96 from 0.93 in July.

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 (%) Aug Jul Jun Aug Y/Y 2020 2019 2018
Inventories 1.2 0.6 1.2 12.3 -1.7 1.4 6.2
Sales -1.1 2.1 2.3 20.6 -4.8 -0.2 6.7
I/S Ratio 1.23 1.20 1.22 1.32 (Aug '20) 1.38 1.35 1.28
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