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Economy in Brief

U.S. Wholesale Inventories & Sales Are Little-Changed
by Tom Moeller  August 9, 2018

Wholesale trade inventories inched 0.1% higher (5.1% y/y) in June following a revised 0.3% May rise, initially reported as 0.6%. The increase compared to m/m stability expected by the Informa Global Markets Survey axnd followed a 0.1% decline indicated in the advance report two weeks ago.

Durable goods inventories rose 0.8% last month (6.2% y/y) following a 0.3% rise. Machinery inventories, the largest sector, increased 0.8% (7.7% y/y), while motor vehicles & parts, the second largest, declined 1.2% (+0.2% y/y). Electrical equipment inventories grew 0.5% (7.8% y/y). Inventories of nondurable goods declined 1.0% (+3.3% y/y) following a 0.4% rise. Drug inventories, which make up a quarter of nondurable inventories, fell 0.8% and were roughly unchanged y/y. Groceries inventories, the second largest category, also were fairly steady (-0.6% y/y). Petroleum inventories declined 0.8% (+15.6% y/y). Apparel inventories eased 1.1% (-4.2% y/y), down for the third straight month.

Sales at the wholesale level eased 0.1% (+10.2% y/y) in June after a little-revised 2.1% May increase. A 0.6% June rise had been expected in the Action Economics Forecast Survey.

Durable goods sales increased 0.2% (9.9% y/y) after two months of strong increase. Sales of electrical equipment, the largest sector, rose 1.9% (7.2% y/y) after one month of stability. Professional and commercial equipment sales, which includes computers, fell 2.2% (+7.5% y/y), while vehicle sales edged 0.4% higher (10.1% y/y). Nondurable product sales eased 0.3% (+10.6% y/y) after three months of strong increase. Petroleum product sales, the largest category, rose 1.2% (46.1% y/y) fueled by higher prices. Drug store sales fell 0.5% (+3.4% y/y) while grocery store sales fell 0.4% (-3.9% y/y). Sales of apparel inched 0.1% higher (5.5% y/y) and chemical sales strengthened 1.6% (15.1% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level held m/m at 1.25 in June and it remained the lowest level since November 2014.

The I/S ratio for durable goods increased to 1.58 from 1.57 which was the lowest since November 2013. The machinery ratio declined to a six-year low of 2.54 while motor vehicles dropped to 1.53, a four-year low. The I/S ratio for nondurable goods declined to 0.94 the lowest since December 2014. The petroleum industry I/S ratio slipped to 0.38, also a three-and-a-half year low. The drug industry I/S held steady at a low 1.05 while apparel's I/S ratio of 1.99 was the lowest since April 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 AS1REPNA database.

Wholesale Sector - NAICS Classification (%) Jun May Apr Y/Y 2017 2016 2015
Inventories 0.1 0.3 0.1 5.1 3.6 2.2 1.3
Sales -0.1 2.1 1.4 10.2 7.4 -1.3 -4.9
I/S Ratio 1.25 1.25 1.27 1.31 (Jun '17) 1.30 1.35 1.33
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