Economy in Brief

Retailing In retailing, sales in May for the distributive trades survey compared to a year ago show that the May reading dropped to -10 from +5 in April and from a positive reading in March. Orders compared to a year ago fell to a - 30 reading in May from a +1 in April. Sales adjusted for the time of year fell to a -18 reading from +21 in April. The stock-sales ratio rose to a +25 in May after a -2 in April, indicating potentially that inventories are beginning to build while sales are weakening.

The queue percentile standings for these readings show that orders compared to a year ago are extremely weak with the 8.8% standing. Sales compared to a year ago have a 20-percentile standing; sales compared to the time of year have a 23.9% standing. The stock-sales ratio has nearly an 89-percentile standing, potentially an indication of a building stock-sales imbalance.

The readings for expectations in retailing show that the June expectations for sales compared to a year ago are flat, an improvement from -7 logged for May. Expected sales adjusted for the time of year have been running hot and cold month-by-month. Orders compared to a year-ago are decisively weaker than the -25 reading in June when compared to -8 in May; they are even slightly weaker than the March reading of -23. Expected sales for the time of year at a -9 reading compares to a +16 reading for the month of May. The -9 reading breaks a string of positive numbers. The stock-sales ratio moves up to +14 in June from +5 in May.

The queue percentile standings for expectations essentially mirror the readings that we see for sales in the current period. Orders compared to a year ago have a 7.4 percentile standing. Sales compared to a year ago are at a 27-percentile standing. Sales evaluated for the time of year log a 29.5 percentile standing. The stock-sales ratio expected for June has a 64.6 percentile standing.

Wholesaling Wholesaling readings roughly mirror the retailing with slightly firmer percentile standings. Sales in May compared to a year ago slipped to a -5 reading from +13 in April. Orders compared to a year ago fall to -8 from -2 in April. Sales for the time of year have a +8 reading compared to plus 15 in April. The stock-sales ratio moves up to +31 from plus 18 in April.

The queue rankings show percentile standings for wholesale sales a year ago at a 23.6 percentile mark. Orders compared to a year ago have a 31-percentile standing, much stronger than their counterpart reading for retailing. Sales for the time of year have a 41.2 percentile standing, also stronger than its counterpart reading for retailing. The stock-sales ratio has a 90.5 percentile standing, close to the queue standing for retailing.

Expected wholesale sales in June compared to a year ago show a -3 net reading compared to a +9 in May. Orders, compared to a year ago, have a -6 reading, a worsening from -1 in May but an improvement from April and March. Wholesale sales for the time of year slipped to -6 in June from +14 in May. The stock-sales ratio edged lower to a net reading of +17 in June from +20 in May.

The percentile standings for expected wholesale sales in June show a 27-percentile standing for sales compared to a year ago. Orders compared to a year ago have a 32-percentile standing; that's much stronger than the counterpart reading in retailing for expectations. Sales for the time of year have a 44.9 percentile standing, also considerably stronger than the retail counterpart for expectations. However, the stock-sales ratio, with a 67.7 percentile-standing, is close to the ranking for expected sales in retailing.

First back-track in seven months Germany's IFO survey made its first back-tracking in seven months in May. The all-sector climate index stepped back to a net reading of -7.5 in May from -0.6 in April. Current conditions edged to a slightly lower all-sector index reading, dropping to +16 from +16.6 in April. Expectations made a larger drop falling to -14.2 in May from -7.7 in April for the all-sector index.

Rankings The ranking assessments of these headlines are low; the all-sector climate index is at a 16.4 percentile rank, the current conditions index is at a 26.9 percentile rank, and the expectations index at a 10.5 percentile rank. All these standings are substantially below their respective medians which occur at rankings at 50%.

Climate by sector The climate ratings in May show negative values across the board except for the service sector with a +6.8 reading, edging slightly lower from +6.9 in April. Manufacturing that had a +6.3 rating in April had fallen to a -0.3 climate reading in May. Among the sector rankings, the weakest ranking is for wholesaling at a 7.8-percentile rank while the strongest ranking is for construction with a 25.1 percentile rank, followed by manufacturing at a 23.7 percentile rank.

Current conditions by sector Current conditions show more positive diffusion readings for May with the all-sector reading at a positive 16, manufacturing at a positive 14.1, and services at a positive 24.3. But for the all-sector headline and the sectors, there was only one improvement, that was in the service sector which improved to the diffusion reading of 24.3 in May from 22.1 in April. Manufacturing backtracked to 14.1 in May from 15.4 in April while construction, wholesaling and retailing all dropped from positive readings to net negative readings in May. The rankings for the current indexes show more strength than for climate, with construction coming close to its median at a 47.5 percentile standing, followed by retailing at a 40.6 percentile standing. However, wholesaling again is the weakest with a 16.4 percentile ranking in May.

Expectations by sector Expectations show negative readings across the board and deterioration month-to-month with one exception, construction. Construction improved ever so slightly to a -32.4 reading in May from -32.5 reading in April. For the rest of the sectors, there is month-to-month deterioration from April to May with a drop of more than ten points for manufacturing comprising the biggest month-to-month drop of all. The standings show several very weak sectors. Wholesaling is at a 5.9 percentile standing and construction at a 7.3 percentile standing. The strongest percentile standing is in manufacturing at a 16.4 percentile standing followed by retailing at a 13.7 percentile standing. Obviously, compared to climate and current conditions, the standings for expectations show much weaker conditions across the board.