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Economy in Brief

U.S. Wholesale Inventories & Sales Growth Slows
by Tom Moeller  May 9, 2018

Wholesale trade inventories increased 0.3% (5.8 y/y) during March following a 0.9% February gain, revised from 1.0%. The March rise matched the increase reported in the advance report released on April 26 and also was below market expectations in the Informa Global Markets Survey for a 0.5% rise.

Durable goods inventories increased 0.8% (6.2% y/y) in March following a modest 1.1% rise in February. The 6.2% y/y gain was significantly positive versus moderate inventory decumulation early in 2016. Electrical product inventories increased a steady 1.4% (11.3% y/y) while machinery inventories rose 0.6% (5.6% y/y) following a 1.3% rise. Computer equipment inventories declined 1.7% (-1.8% y/y) after a 3.0% rise. Inventories of nondurable goods fell 0.4% (+5.2% y/y) following a 0.7% rise. A 1.0% decline (-0.3% y/y) in inventories of grocery products held back the overall rise. Apparel inventories also were off 0.7% (-0.8% y/y) after a 0.3% gain. Petroleum inventories held steady (-3.7% y/y) while inventories of paper products increased 1.4% (5.3% y/y).

Sales at the wholesale level gained 0.3% (4.7% y/y) during March following a 1.1% February rebound. A 0.5% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales declined 0.3% (+5.5% y/y) after a 1.8% increase. The fall was led by a 1.6% drop (+4.3% y/y) in motor vehicle sales after a 1.2% jump. Electrical product sales gained 2.1% (12.4% y/y) after a 1.9% rise. Machinery sales rose 0.9% (8.4% y/y) after a 4.0% rise, but furniture inventories fell 1.7% (-3.9% y/y) following a 4.5% gain. Sales of nondurable products strengthened 1.0% (4.0% y/y) after a 0.4% rise. Petroleum product sales gained 0.9% (17.8% y/y) after two months of decline. Apparel sales jumped 2.0% (5.3% y/y) after a 5.9% strengthening, but chemical product sales fell 0.8% (+6.8 y/y) after a 2.1% rise.

The inventory-to-sales ratio at the wholesale level held steady at 1.26 in March for the third straight month. It remained well below its most recent high of 1.36 in February 2016.

The I/S ratio for durable goods rose to 1.60 from 1.58 in February. It remains well below its most recent peak of 1.74 in January 2016. The furniture I/S rose to 1.74 and was increased from the 1.51 December 2016 low. Countering this this strength is the machinery and equipment I/S ratio which stands at 1.71, well below the 3.16 high in early-2016. The I/S ratio for nondurable goods fell to 0.94 from 0.96. It was below the 1.02 ratio two years ago. The petroleum industry I/S ratio was near its lowest level since 2014, and down from the 0.54 high in early 2016. The I/S ratio in the chemical industry was similarly depressed and the apparel industry ratio of 1.94 was down from the 2.19 high late in 2015.

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 from the Action Economics Database.

Wholesale Sector - NAICS Classification (%) Mar Feb Jan Y/Y 2017 2016 2015
Inventories 0.3 0.9 0.9 5.8 3.6 2.6 1.1
Sales 0.3 1.1 -1.5 4.7 7.6 -0.4 -4.9
I/S Ratio 1.26 1.26 1.26 1.28 (Mar'17) 1.27 1.33 1.32
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