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Economy in Brief

Wholesale Inventory Growth Remains Firm
by Tom Moeller  February 9, 2017

Inventories at the wholesale level jumped another 1.0% (2.8% y/y) during December, the same as in November. The advance report indicated a 1.1% December increase. Inventories of durable goods increased 0.7% (0.8% y/y) after a 1.0% rise. Motor vehicle inventories strengthened 2.0% (4.4% y/y), but furniture inventories declined 0.6% (2.9% y/y). Computer equipment stockpiles strengthened 1.1% (4.5% y/y), while machinery inventories ticked 0.1% higher (-1.1% y/y). Inventories of nondurable products jumped 1.4% (5.8% y/y) after a 1.0% increase. Petroleum inventories increased 10.1% (35.8% y/y) while chemical stockpiles jumped 3.3% (0.4% y/y). Inventories of paper posted a 0.5% decrease (+2.6% y/y), and apparel inventories declined 0.9% (-7.1% y/y). Farm-product stockpiles decreased 0.9% (+16.5% y/y).

Wholesale sales jumped 2.6% (3.7% y/y) after a 0.5% rise. A 0.6% rise was expected in the Action Economics Forecast Survey. Nondurable goods sales improved 2.8% (5.5% y/y) as petroleum sales jumped 15.0% (33.4% y/y). Chemical sales improved 0.6% (5.3% y/y), and apparel sales rebounded 3.5% (-2.5% y/y). Sales of durable goods surged 2.4% (1.8% y/y) while electrical product sales strengthened 3.7% (4.0% y/y). Metals sales increased 2.8% both m/m and y/y. Motor vehicle sales improved 5.5% (3.1% y/y) and computer equipment sales strengthened 3.6% (-3.5% y/y). Sales of machinery declined 1.0% (-2.6% y/y).

The inventory-to-sales ratio of 1.29 remained lower than January's 1.37 peak. The durable goods ratio of 1.62 was down from 1.72 around the middle of last year. The machinery I/S ratio eased y/y to 2.98, while the motor vehicles ratio slipped y/y to 1.74. The computer industry's I/S ratio backpedaled to 0.84 from the 0.87 November high. The electrical equipment industry's I/S ratio fell to 0.96 from its 1.08 peak during March of 2015. In the nondurable goods sector, the I/S ratio of 0.990 was down from 1.06 last February. The chemical sector's ratio of 1.21 was down sharply y/y. In the petroleum sector, the I/S ratio of 0.46 compared to 0.57 early in the year.

The wholesale trade figures are available in Haver's USECON database. The Action Economic Survey results are contained in AS1REPNA.

Wholesale Sector - NAICS Classification (%) Dec Nov Oct Dec Y/Y 2016 2015 2014
Inventories 1.0 1.0 -0.1 2.8 2.8 1.8 6.4
Sales 2.6 0.5 1.1 3.7 -0.2 -4.3 3.6
I/S Ratio 1.29 1.32 1.31 1.35 (Dec '15) 1.34 1.32 1.21
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