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Economy in Brief

Wholesale Inventories Unchanged in November; Sales Edged Up
by Sandy Batten  January 8, 2021

• Inventories unchanged while sales rose 0.2% in November.

• Wholesale inventory-to-sales ratio unchanged at 1.31.

Wholesale inventories were unchanged in November (-2.1% y/y) after solid gains of 1.3% m/m in October and 0.9% m/m in September. Inventory swings can have a meaningful impact on GDP growth. In the latest GDP report, total inventory building contributed 6.6%-points to the 33.4% q/q saar growth in total GDP in Q3 2020. Even with the unchanged reading in November, inventories are on track to add further to GDP growth in Q4.

Durable goods inventories rose 0.9% m/m (-4.1% y/y) in November with widespread gains across the major components. Gains in furniture inventories (+4.3% m/m) and computer equipment inventories (+4.0% m/m) led the overall rise. The only major component experiencing a decline in November was inventories of electrical and electronic goods (-0.8% m/m). By contrast, inventories of nondurable goods slumped 1.2% m/m (+1.1% y/y) in November following four consecutive monthly increases. Monthly declines were widespread, led by a 5.4% m/m drop in drug inventories. Petroleum and petroleum inventories jumped up 6.8% m/m following three consecutive monthly declines.

Wholesale sales jumped edged up 0.2% m/m (-0.2% y/y) in November following a downwardly revised 1.7% m/m gain in October (initially +1.8% m/m). This was the seventh consecutive monthly rise in sales after they had collapsed in March and April. The Action Economics Forecast Survey anticipated a 0.6% m/m rise. Sales of durable goods fell 0.4% m/m (+2.5% y/y), led by a 3.9% m/m decline in motor vehicle sales and a 2.6% m/m drop in furniture sales. By contrast, sales of nondurable goods increased 0.7% m/m (-2.8% y/y) in November, led by a 6.6% m/m jump in apparel sales and a 6.1% m/m increase in sales of farm product raw materials.

The inventory-to-sales (I/S) ratio at the wholesale level was unchanged at 1.31 in November. After hitting a record high of 1.63 in April (series begins in 1980), it has returned to pre-COVID levels. The durable goods I/S ratio increased to 1.59 from 1.57, which was the lowest in over two years. Meanwhile, the nondurable I/S ratio slipped to 1.04 from 1.06, down meaningfully from April's 1.22 record.

The wholesale trade figures are available in Haver's USECON database. Expectations for sales are in the AS1REPNA database.

Wholesale Sector - NAICS Classification (%) Nov Oct Sep Nov Y/Y 2019 2018 2017
Inventories 0.0 1.3 0.9 -2.1 1.7 6.5 3.0
Sales 0.2 1.7 0.4 -0.2 0.6 6.8 6.7
I/S Ratio 1.31 1.31 1.32 1.33 (Nov '19) 1.34 1.28 1.30
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