Global| Mar 08 2021U.S. Wholesale Inventory Accumulation Picks Up While Sales Surge in January
by:Tom Moeller
|in:Economy in Brief
Summary
• Wholesale inventory accumulation is broad-based. • Unexpected jump in sales lowers I/S ratio. Activity in the wholesale sector is strengthening. Wholesale inventories surged 1.3% during January (0.6% y/y) following a 0.6% December [...]
• Wholesale inventory accumulation is broad-based.
• Unexpected jump in sales lowers I/S ratio.
Activity in the wholesale sector is strengthening. Wholesale inventories surged 1.3% during January (0.6% y/y) following a 0.6% December rise, revised from 0.3%. The gain equaled October's increase which was the strongest since December 2011. The rise matched expectations in the Informa Global Markets Survey.
Durable goods inventories jumped 1.2% in January (-3.9% y/y) following decumulation during much of last year. Computer & peripheral equipment led the gain with a 3.4% rise (1.2% y/y) which followed two months of similar strength. Hardware and plumbing & heating equipment inventories were also strong, up 2.1% (7.2% y/y). Motor vehicles inventories rose 1.2% (-5.7% y/y) but machinery inventories fell 0.3% (-5.3% y/y). Nondurables inventories rose 1.5% (4.4% y/y) as petroleum inventories surged 4.6% (0.6% y/y) with higher prices. Chemical inventories rose 2.4% (-2.5% y/y) but apparel inventories fell 1.7% (-14.9% y/y). They have been falling sharply since June 2020.
Wholesale sales surged 4.9% during January (5.9% y/y) after strengthening 1.9% in December, revised from 1.2%. A 1.2% rise was anticipated in the Action Economics Forecast Survey. Durable goods sales surged 4.9% (9.7% y/y) as furniture & home furnishings sales jumped 12.7% (2.2% y/y). That strength was accompanied by a 5.3% rise (-2.2% y/y) in electronic goods sales. Auto sales rose 2.1% (13.0% y/y). Nondurable wholesale sales rose 4.9% (2.5%) as petroleum product shipments jumped 14.9% (-15.0% y/y) as oil prices increased. Paper sales rose 2.9% (1.6% y/y) but sales of chemicals & allied products rose a lesser 1.4% (-0.6% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level declined sharply to 1.24 in January, the lowest level since November 2014. This ratio is well below a record high of 1.63 in April of last year (data goes back to 1980). The durable goods I/S ratio weakened to a nine-year low of 1.52 due to declines which were broad-based. The nondurable I/S ratio fell sharply to 0.99, below April's 1.22 record high.
The wholesale trade figures and oil prices 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 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Inventories | 1.3 | 0.6 | -0.0 | 0.6 | -1.4 | 1.4 | 6.5 |
| Sales | 4.9 | 1.9 | 0.3 | 5.9 | -4.3 | 0.5 | 6.8 |
| I/S Ratio | 1.24 | 1.29 | 1.31 | 1.31 (Jan '20) | 1.37 | 1.34 | 1.28 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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