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Economy in Brief

U.S. Wholesale Inventories Post Strong February Gain; Sales Fall
by Tom Moeller  April 9, 2021

• Wholesale inventory strength reflects higher oil prices.

• Decline in sales helps to raise I/S ratio.

Wholesale inventories increased 0.6% (2.0% y/y) during February following a 1.4% January jump, revised from 1.3%. A 0.5% gain had been expected in the Informa Global Markets Survey. Data for 2020 were revised.

Durable goods inventories rose 0.3% in February (-0.5% y/y) following a 1.3% January rise. Computer & peripheral equipment led the gain with a 0.9% rise (8.2% y/y) which followed three months of even stronger increases. Hardware and plumbing & heating equipment inventories were also strong, up 0.8% (7.7% y/y). Motor vehicles inventories eased 0.6% (-4.6% y/y) while machinery inventories edged 0.1% higher (-4.3% y/y). Nondurables inventories rose 1.1% (6.0% y/y) as petroleum inventories surged 8.1% (20.8% y/y) with higher prices. Chemical inventories rose 0.5% (-1.3% y/y) but apparel inventories jumped 6.0% (-9.2% y/y). They had been falling sharply since June 2020.

Wholesale sales declined 0.8% during February (+6.4% y/y) after strengthening 4.4% in January, revised from 4.9%. A 2.2% decline was anticipated in the Action Economics Forecast Survey. Durable goods sales weakened 2.2% (+7.2% y/y) as furniture & home furnishings sales fell 2.2% (+0.3% y/y). Auto sales declined 5.0% (+2.1% y/y). That decline was accompanied by a 0.3% rise (5.8% y/y) in electronic goods sales.  Nondurable wholesale sales rose 0.5% (5.7%) but petroleum product shipments jumped 9.3% (6.7% y/y) as oil prices increased. Paper sales fell 4.3% (-3.0% y/y) but sales of chemicals & allied products rose 0.4% (0.7% y/y). Apparel sales declined 6.5% (-10.3% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level rose to 1.27 in February from 1.25, matching the low in May 2018. This ratio is well below a record high of 1.66 in April of last year (figures date back to 1980). The durable goods I/S ratio rose to 1.55 from a nine-month low of 1.51. The nondurable I/S ratio held steady at 1.00, below last April's record high of 1.25.

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 (%) Feb Jan Dec Feb Y/Y 2020 2019 2018
Inventories 0.6 1.4 0.3 2.0 -1.7 1.4 6.2
Sales -0.8 4.4 1.4 6.4 -4.6 -0.2 6.7
I/S Ratio 1.27 1.25 1.29 1.32 (Feb'20) 1.38 1.35 1.28
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