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Economy in Brief

U.S. Wholesale Inventories and Sales Strengthen
by Tom Moeller  February 9, 2018

During all of last year, inventories at the wholesale level increased 3.5%, the largest increase in three years. During December alone, inventories increased 0.4% (3.5% y/y) following a 0.6% November rise, revised from 0.8%. In the advance report issued on January 26, wholesale inventories were reported up 0.2% m/m in December.

In December, durable goods inventories increased 0.4% (4.8% y/y), the same as in November. Motor vehicle inventories gained 2.8% (3.1% y/y). Furniture & home furnishing inventories rose 0.2% (3.5% y/y) and computer equipment inventories increased 0.6% (2.5% y/y). Electrical equipment inventories strengthened 1.2% (11.4% y/y), but machinery inventories fell 0.2% (+2.7% y/y). Inventories of nondurable goods gained 0.4% (1.7% y/y) after a 0.9% rise. The value of chemical inventories jumped 3.2% (3.3% y/y). Farm product raw materials inventories improved 2.2% (9.9% y/y), but apparel inventories eased 0.7% (-4.0% y/y). Inventories of petroleum declined 3.4% (-6.2% y/y).

Sales at the wholesale level strengthened 1.2% (5.9% y/y) in December after a 1.9% November jump. A 0.5% m/m rise had been expected in the Action Economics Forecast Survey.

Nondurable goods purchases increased 1.5% (5.4% y/y) after a 2.2% November rise, as petroleum sales gained 3.3% (22.8% y/y). Chemical product sales rose 2.6% (8.2% y/y), and farm-product sales rose 1.5% (-2.7% y/y). Apparel sales rose 0.2% (-3.2% y/y). Durable goods sales increased 1.0% (6.5% y/y) reflecting a 1.0% rise (12.3% y/y) in sales of machinery, but motor vehicle purchases eased 0.2% (+6.2% y/y). Electrical equipment sales jumped 3.5% (9.1% y/y) but furniture sales ticked just 0.1% higher (-8.2% y/y).

The inventory-to-sales ratio at the wholesale level declined to 1.22 in December, its lowest reading since October 2014. It was below a February 2016 high of 1.36.

The I/S ratio for durable goods continued to decline, falling to 1.56; well below its recent peak of 1.74 in January 2016. The metals & minerals ratio declined to 2.00, and the motor vehicle ratio rose to 1.72. The electrical equipment ratio neared its three-year low of 0.97, but the computer equipment ratio ticked up to 0.86. The I/S ratio for nondurable goods fell to 0.91, its lowest point in three years. The apparel industry ratio declined to 1.96 from is April 2017 peak of 2.17, and the chemical industry ratio was stable at 1.11. The grocery industry ratio held at 0.65, and the petroleum industry ratio dropped sharply to 0.33.

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

Data Point to Momentum in GDP Growth as Year Begins from the Federal Reserve Bank of Dallas is available here.

Wholesale Sector - NAICS Classification (%) Dec Nov Oct Dec Y/Y 2017 2016 2015
Inventories 0.4 0.6 -0.4 3.5 3.5 2.6 1.1
Sales 1.2 1.9 0.8 5.9 7.6 -0.4 -4.9
I/S Ratio 1.22 1.23 1.25 1.29 (Dec '16) 1.27 1.33 1.32
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