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Economy in Brief

U.S. Wholesale Inventories Lag Sales in January
by Tom Moeller  March 8, 2022

• Inventory gain is broad-based.

• Sales strength also extends across categories.

• I/S ratio drops.

Wholesale inventories rose 0.8% (18.1% y/y) during January compared to a 1.1% gain reported in the advance report issued on February 28. December's 2.6% inventory increase was revised from 2.2%. The Informa Global Markets Survey expected a 0.8% January gain.

Durable goods inventories increased 0.8% in January (20.2% y/y) after surging 3.1% in December. Motor vehicle & parts inventories fell 2.2% (+8.1% y/y). Furniture & home furnishings inventories gained 2.5% (38.2% y/y). Metals & minerals inventories increased 1.3% (48.2% y/y). Electrical equipment inventories were up 1.3% (27.0%), while professional & commercial equipment inventories increased 1.3% (15.1% y/y). Machinery inventories rose 1.2% (8.0% y/y). In the nondurable sector, inventories increased 0.9% (15.0% y/y) after strengthening 1.8% in December. A 1.1% increase (30.3% y/y) in inventories of petroleum & petroleum products led the January rise. Apparel inventories gained 2.0% (25.8% y/y) while chemicals inventories rose 2.7% (20.8%). Paper & paper product inventories edged 0.6% higher (11.7% y/y).

Wholesale sales surged 4.0% (22.4% y/y) during January after increasing 0.8% in December, revised from 0.2%. A 0.6% rise was anticipated in the Action Economics Forecast Survey.

Durable goods sales strengthened 5.7% in January (18.6% y/y) after strong gains in each of the prior three months. Electrical equipment sales increased 11.3% (25.2% y/y) and hardware, plumbing & heating products increased 5.9% (18.9% y/y). Furniture & home furnishings sales rose 6.2% (12.0% y/y). Lumber sales increased 6.1% (30.8% y/y) and purchases of motor vehicles gained 6.0% (7.0% y/y). Machinery sales increased 3.7% (14.0% y/y) and metals sales rose 1.5% (54.3% y/y). Sales of nondurable goods rose 2.4% (26.0% y/y) in January following a 0.2% improvement in December. Chemical purchases improved 4.5% (31.6% y/y). Sales of petroleum products strengthened 2.6% (67.8% y/y) with higher prices. Sales of paper product sales surged 2.3% (19.2% y/y) but grocery sales held steady (16.4% y/y). Apparel sales improved 0.6% (19.6% y/y).

The inventory-to-sales ratio plunged to 1.20 in January, its lowest level in six months. The durable goods I/S ratio dropped to 1.53. The nondurable I/S ratio fell to 0.91, down from 1.00 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 (%) Jan Dec Nov Jan Y/Y 2021 2020 2019
Inventories 0.8 2.6 1.7 18.1 18.9 -1.9 1.4
Sales 4.0 0.8 1.7 22.4 22.4 -4.9 -0.2
I/S Ratio 1.20 1.24 1.22 1.25 (Jan. '21) 1.23 1.38 1.35
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