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Economy in Brief

U.S. Wholesale Inventories Significantly Outpace Sales in February
by Tom Moeller  April 8, 2022

• Inventory gain remains broad-based.

• Sales strength led by petroleum.

• I/S ratio edges higher.

Wholesale inventories strengthened 2.5% (19.9% y/y) during February compared to a 2.1% rise in the advance report issued on March 28. Inventories rose 1.2% in January, revised from 0.8%. December inventories rose 2.5%, revised from 2.6%. The Informa Global Markets Survey expected a 2.1% February gain.

Durable goods inventories increased 1.9% in February (21.3% y/y) after rising 1.1% in January. Furniture & home furnishings inventories led the gain and jumped 3.6% (41.4% y/y). Electrical equipment inventories rose 2.5% (28.9% y/y) while professional equipment inventories surged 2.0% (15.9% y/y). Motor vehicle & parts inventories rose 1.4% (10.9% y/y) and machinery inventories gained 0.6% (7.2%y/y). In the nondurable sector, inventories rose 3.3% (17.9% y/y) after strengthening 1.3% in January. Apparel inventories jumped 10.1% (27.0% y/y). A 5.1% increase (24.2% y/y) in inventories of petroleum & petroleum products followed while chemicals inventories rose 3.4% (22.7%). Paper & paper product inventories edged 0.1% higher (9.7% y/y).

Wholesale sales increased 1.7% in February (25.5% y/y) after strengthening 5.0% in January, revised from 4.0%. A 1.5% rise was anticipated in the Action Economics Forecast Survey.

Durable goods sales eased 0.3% (+21.8% y/y) after strong gains in each of the prior four months. Home furnishings sales rose 4.5% (20.1% y/y) while machinery sales increased 3.3% (25.5% y/y). Lumber sales increased 2.5% (40.8% y/y) and metals sales rose 0.8% (52.8% y/y). To the downside, electrical equipment sales fell 3.7% (+22.6% y/y) while purchases of motor vehicles also declined 3.7% (+9.9% y/y). Sales of nondurable goods gained 3.5% (29.0% y/y) in February following a 3.8% improvement in January. Sales of petroleum products rose 7.3% (59.8% y/y) with higher prices. Grocery sales strengthened 4.2% (22.4% y/y). Sales of paper product rose 0.8% (23.7% y/y) and chemical purchases improved 0.4% (32.6% y/y). Apparel sales eased 0.8% (+23.5% y/y).

The inventory-to-sales ratio rose to 1.21 after plunging to 1.20 in January, its lowest level in six months. The durable goods I/S ratio rose to 1.55. The nondurable I/S ratio held steady at 0.91.

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 (%) Feb Jan Dec Feb Y/Y 2021 2020 2019
Inventories 2.5 1.2 2.5 19.9 18.1 -1.8 1.3
Sales 1.7 5.0 0.1 25.5 22.7 -4.8 -0.4
I/S Ratio 1.21 1.20 1.25 1.27 (Feb. '21) 1.23 1.38 1.35
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