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Economy in Brief

U.S. Wholesale Inventories Inch Higher; Sales Strengthen
by Tom Moeller  June 8, 2018

Wholesale trade inventories increased 0.1% (5.8 y/y) during April following a 0.2% March gain, revised from 0.3%. The April rise matched the increase reported in the advance report released on May 30 and compared to no change expected in the Informa Global Markets Survey.

Durable goods inventories increased 0.2% (6.2% y/y) in April following a 0.7% rise in March. The 6.2% y/y gain compared to moderate inventory decumulation early in 2016. Electrical product inventories increased 0.2% (7.8% y/y) after two months of 1.0% gain while machinery inventories held steady (5.4% y/y) following a 0.2% rise. Computer equipment inventories increased 0.9% (-1.0% y/y) after a 2.2% decline. Inventories of nondurable goods were unchanged (5.2% y/y) following a 0.6% decline. A 0.8% increase (-0.9% y/y) in inventories of grocery products reversed a 0.9% fall. Apparel inventories were off 0.6% (-1.1% y/y) after a 0.4% decline. Petroleum inventories surged 3.1% (7.3% y/y) with higher prices while inventories of paper products declined 1.3% (+4.6% y/y), and reversed two months of increase.

Sales at the wholesale level gained 0.8% (7.8% y/y) during April following a 0.4% March increase which was strengthened from last month's report. Revised data indicate strong growth through last year. A 0.4% April rise had been expected in the Action Economics Forecast Survey.

Durable goods sales increased 0.8% (7.8% y/y) after a 0.4% increase. Motor vehicle sales declined 0.7% (+6.2% y/y) after two months of strong rise. Electrical product sales fell 1.5% (+6.1% y/y), following a 0.8% rise. Machinery sales surged 1.9% (12.4% y/y) after a 0.1% dip, and furniture sales jumped 1.6% (2.3% y/y) following a 1.9% fall. Nondurable product sales strengthened 0.7% (7.5% y/y) after a 0.8% rise. Petroleum product sales gained 1.5% (22.5% y/y) after a 1.0% gain. Apparel sales fell 2.9% (+4.1% y/y) after holding steady, but chemical product sales surged 2.0% (12.7 y/y) after a 1.2% fall.

The inventory-to-sales ratio at the wholesale level eased to 1.28 in April after three months at 1.29. It remained well below its most recent high of 1.38 in February 2016.

The I/S ratio for durable goods eased to 1.59 from 1.60. It remains well below its most recent peak of 1.74 in January 2016. The furniture I/S fell sharply to 1.86 from a recent high of 1.92. The machinery and equipment I/S ratio also plummeted to a six year low of 2.57, well below the 3.02 high in early-2016. The I/S ratio for nondurable goods declined to 0.98 from 0.99. It was below the 1.09 ratio two years ago. The petroleum industry I/S ratio rose slightly m/m but remained near its lowest level since 2014, down from the 0.63 high in early 2016. The I/S ratio in the chemical industry was similarly depressed and the apparel industry ratio has been steady near 2.10 for two years.

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 (%) Apr Mar Feb Y/Y 2017 2016 2015
Inventories 0.1 0.2 0.8 5.8 3.6 2.2 1.3
Sales 0.8 0.4 0.9 7.8 7.4 -1.3 -4.92
I/S Ratio 1.28 1.29 1.29 1.30 (Apr.'17) 1.29 1.35 1.33
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