U.S. Wholesale Inventories Increase; Sales Decline

Inventories at the wholesale level rebounded 0.4% during May following a 0.4% April decline, revised from -0.5%. Inventories rose a moderate 1.9% y/y.

Durable goods inventories increased 0.6% (2.8% y/y) following no change in April. Motor vehicle inventories rebounded 0.7% (2.9% y/y), but furniture inventories eased 0.2% (+4.8% y/y). Inventories of computers and peripherals rebounded 2.9% y (12.3% y/y), while machinery inventories rose 0.7% (-2.3% y/y) following four straight months of decline. Inventories of nondurable goods held steady (0.6% y/y), following declines in three of the prior four months. Petroleum inventories increased 2.6% (14.6% y/y), also following declines in three of the prior four months. Chemical inventories were off 1.4% (+0.9% y/y). Apparel inventories were roughly steady (-10.9% y/y) while paper and paper product stockpiles rose 0.5% (0.9% y/y).

Wholesale sales declined 0.5% (+9.2% y/y) following a 0.3% decline, revised from -0.4%. A 0.2% rise was expected in the Action Economics Forecast Survey.

Nondurable goods sales were off 0.9% (+8.0% y/y as petroleum sales fell 7.8% (+12.5% y/y). Chemical sales increased 1.6% (12.0% y/y). Apparel sales increased 3.2% (-5.9% y/y) after four consecutive sharp monthly declines. Sales of paper products rose 2.0% (5.6% y/y) while grocery product sales increased 0.8% (7.8% y/y). Sales by durable goods wholesalers eased 0.1% (+10.7% y/y). Computer sales gained 2.0% (7.9% y/y), and machinery sales rose 1.1% (10.6% y/y). Electrical equipment sales eased 0.6% (+10.4% y/y) while motor vehicle distributors' sales slipped 0.5% (+10.9% y/y). Furniture sales rebounded 2.1% (3.6% y/y).

Wholesalers' inventory-to-sales ratio rose to 1.29 but was down sharply from 1.34 twelve months earlier.

The durable goods I/S ratio of 1.63 compared to the 1.74 high in January 2016. The machinery I/S ratio of 2.84 was reduced from 3.13 a year earlier. The motor vehicles ratio of 1.76 declined y/y from 1.86. The furniture I/S ratio of 1.65 was up y/y from 1.60, while the metals ratio increased to 2.00. The I/S ratio of 0.86 in computers and equipment was up slightly y/y, but was stable during the last two months. In the nondurable goods sector, the I/S ratio of 0.97 was down from 1.01 a year ago. The petroleum industry ratio of 0.46 compared to 0.45 one year earlier. The ratio in the chemical sector of 1.15 was lower than 1.23 in May 2016.

The wholesale trade figures are available in Haver's USECON database. The Action Economic Survey results are contained in AS1REPNA.