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Economy in Brief

U.S. Wholesale Inventory Accumulation Picks Up While Sales Surge in January
by Tom Moeller  March 8, 2021

• Wholesale inventory accumulation is broad-based.

• Unexpected jump in sales lowers I/S ratio.

Activity in the wholesale sector is strengthening. Wholesale inventories surged 1.3% during January (0.6% y/y) following a 0.6% December rise, revised from 0.3%. The gain equaled October's increase which was the strongest since December 2011. The rise matched expectations in the Informa Global Markets Survey.

Durable goods inventories jumped 1.2% in January (-3.9% y/y) following decumulation during much of last year. Computer & peripheral equipment led the gain with a 3.4% rise (1.2% y/y) which followed two months of similar strength. Hardware and plumbing & heating equipment inventories were also strong, up 2.1% (7.2% y/y). Motor vehicles inventories rose 1.2% (-5.7% y/y) but machinery inventories fell 0.3% (-5.3% y/y). Nondurables inventories rose 1.5% (4.4% y/y) as petroleum inventories surged 4.6% (0.6% y/y) with higher prices. Chemical inventories rose 2.4% (-2.5% y/y) but apparel inventories fell 1.7% (-14.9% y/y). They have been falling sharply since June 2020.

Wholesale sales surged 4.9% during January (5.9% y/y) after strengthening 1.9% in December, revised from 1.2%. A 1.2% rise was anticipated in the Action Economics Forecast Survey. Durable goods sales surged 4.9% (9.7% y/y) as furniture & home furnishings sales jumped 12.7% (2.2% y/y). That strength was accompanied by a 5.3% rise (-2.2% y/y) in electronic goods sales. Auto sales rose 2.1% (13.0% y/y). Nondurable wholesale sales rose 4.9% (2.5%) as petroleum product shipments jumped 14.9% (-15.0% y/y) as oil prices increased. Paper sales rose 2.9% (1.6% y/y) but sales of chemicals & allied products rose a lesser 1.4% (-0.6% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level declined sharply to 1.24 in January, the lowest level since November 2014. This ratio is well below a record high of 1.63 in April of last year (data goes back to 1980). The durable goods I/S ratio weakened to a nine-year low of 1.52 due to declines which were broad-based. The nondurable I/S ratio fell sharply to 0.99, below April's 1.22 record high.

The wholesale trade figures and oil prices are available in Haver's USECON database. The expectations figure for inventories is contained in the MMSAMER database. Expectations for sales are in the AS1REPNA database.

Wholesale Sector - NAICS Classification (%) Jan Dec Nov Jan Y/Y 2020 2019 2018
Inventories 1.3 0.6 -0.0 0.6 -1.4 1.4 6.5
Sales 4.9 1.9 0.3 5.9 -4.3 0.5 6.8
I/S Ratio 1.24 1.29 1.31 1.31 (Jan '20) 1.37 1.34 1.28
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