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Economy in Brief

U.S. Wholesale Inventories Surge in December
by Tom Moeller  February 9, 2022

• Inventory gain is broad-based.

• Sales increase is negligible.

• I/S ratio increases.

Wholesale inventories rose 2.2% (18.5% y/y) during December compared to a 2.5% gain reported in the advance report issued on January 26. November's inventory increase was revised to 1.7% from 1.4%. The Informa Global Markets Survey expected a 2.1% December gain.

Durable goods inventories increased 2.6% in December (20.0% y/y), the same as in November. Motor vehicle & parts inventories led the gain and rose 4.6% rise (10.3% y/y). Furniture & home furnishings inventories followed with a 4.3% rise (34.1% y/y). Metals & minerals inventories also increased 4.3% (48.7% y/y). Electrical equipment inventories were up 3.9% (26.4%), while professional & commercial equipment inventories increased 2.8% (17.0% y/y). Machinery inventories rose 0.4% (6.0% y/y). In the nondurable sector, inventories increased 1.6% (16.2% y/y) after a 0.4% November rise. A 3.1% increase (35.6% y/y) in inventories of petroleum & petroleum products led the December rise. Apparel inventories gained 5.2% (21.6% y/y) while chemicals inventories rose 2.1% (20.5%). Grocery inventories increased 1.5% (20.3% y/y) as paper & paper product inventories edged 0.7% higher (12.3% y/y).

Wholesale sales gained 0.2% (21.8% y/y) during December after increasing 1.7% in November, revised from 1.3%. A 0.7% rise was anticipated in the Action Economics Forecast Survey.

Durable goods sales improved 0.5% in December (15.5% y/y) after increasing 1.1% in November. Lumber sales strengthened 4.1% (24.6% y/y) and purchases of motor vehicles gained 2.5% (1.8%). Electrical equipment sales increased 1.1% (16.4% y/y) and hardware, plumbing & heating products increased 1.3% (11.7% y/y). To the downside, machinery sales declined 2.7% (+15.4% y/y) and metals sales fell 2.2% (+56.1% y/y). Furniture & home furnishings sales declined 1.8% (+14.2% y/y). Sales of nondurable goods eased 0.1% in December (+27.9% y/y) following three straight months of strong gains. Sales of paper product sales declined 1.5% (19.1% y/y) and grocery sales held steady (20.2% y/y). Increasing were apparel sales by 2.9% (18.1% y/y) and sales of petroleum products which rose 0.7% (82.2% y/y) with higher prices. Chemical purchases improved 0.2% (26.2% y/y).

The inventory-to-sales ratio rose to 1.25 in December, its highest level since February. The durable goods I/S ratio surged to 1.61, up from a May low of 1.48. The nondurable I/S ratio rose to 0.93, down from 1.02 twelve months earlier.

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 (%) Dec Nov Oct Dec Y/Y 2021 2020 2019
Inventories 2.2 1.7 2.5 18.5 18.5 -1.9 1.4
Sales 0.2 1.7 2.5 21.8 22.4 -4.9 -0.2
I/S Ratio 1.25 1.22 1.22 1.28 (Dec. '20) 1.23 1.38 1.35
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