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Economy in Brief

U.S. Wholesale Sales Slip While Inventories Are Unchanged in July
by Sandy Batten  September 9, 2016

Wholesale sector sales slipped 0.5% m/m (-1.0% y/y) in July following an outsize 1.7% m/m (revised from 1.9% m/m) jump in June. The Action Economics Survey had looked for a 0.2% m/m increase. Nondurable goods sales, which had led the June jump, also led the July slide. They fell 1.0% m/m (-2.6% y/y) after a downwardly revised 2.2% m/m surge in June. Sales of petroleum and petroleum products slumped 3.5% m/m in July, nearly offsetting a 3.9% m/m jump in June. Sales fell generally across the major nondurable goods product groups. Durable goods purchases edged up 0.2% m/m (0.7% y/y) in July despite modest monthly declines in sales of motor vehicles and machinery. Furniture and lumber sales rebounded smartly in July after declines in June.

Inventories at the wholesale level were essentially unchanged in July (+0.5% y/y) from a slightly upwardly revised June level (though the 0.3% m/m increase initially reported for June was not revised). July inventories were also revised up slightly from the advance report released on August 26. Inventories of durables goods rose 0.3% m/m in July while inventories of nondurable goods slipped 0.3% m/m. Five of the major durable good product groups experienced a rise in inventories (led by 1.4% m/m rise in professional and commercial equipment inventories) with the remaining four groups experiencing a decline. The monthly decline in nondurable goods inventories was relatively widely spread across major product groups (led by a 2.0% decline in farm products raw materials).

With sales slipping and inventories essentially unchanged, the inventory-to-sales ratio in the wholesale sector edged up to 1.34 in July from 1.33 in July. It had either declined or remained unchanged for five consecutive months. The expansion high was 1.37 reached in January 2016. The nondurable goods ratio rose to 1.04 in July from 1.03 in June while the durable goods ratio was unchanged at 1.65, well below its cycle peak of 1.72 (reached in August 2015).

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

Wholesale Sector - NAICS Classification (%) Jul Jun May Y/Y 2015 2014 2013
Inventories 0.0 0.3 0.2 0.5 1.8 6.4 3.8
Sales -0.4 1.7 0.7 -1.0 -4.3 3.6 3.0
I/S Ratio 1.34 1.33 1.35 1.32 (Jul '15) 1.32 1.21 1.18
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