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Economy in Brief

U.S. Wholesale Inventories Rise as Sales Decline
by Tom Moeller  March 9, 2018

Wholesale trade inventories increased 0.8% during January (5.0% y/y) following a 0.7% December gain, revised from 0.4%. In the advance report issued on February 27, wholesale inventories were reported up 1.0% m/m in January.

Durable goods inventories increased 0.2% (5.1% y/y) following two 0.4% gains. Motor vehicle inventories rose 0.7% (7.2% y/y). Furniture & home furnishing inventories jumped 1.2% (3.4% y/y), but computer equipment inventories decreased 2.0% (-3.6% y/y). Electrical equipment inventories strengthened 0.7% (11.0% y/y), but machinery inventories were stable (2.9% y/y). Inventories of nondurable goods gained 1.8% (4.4% y/y) after three months of strong gain. Inventories of petroleum surged 4.1% (-1.0% y/y). Farm product raw materials inventories improved 2.8% (12.6% y/y) and apparel inventories rose 0.7% (-1.8% y/y). To the downside, the value of chemical inventories fell 1.5% (+4.7% y/y).

Sales at the wholesale level declined 1.1% (+10.0% y/y) in January after a 0.8% December increase. A 0.7% m/m rise had been expected in the Action Economics Forecast Survey.

Nondurable goods purchases fell 0.8% (+6.7% y/y) after two months of strong increase. Chemical product sales fell 2.4% (+6.0% y/y), and farm-product sales declined 3.7% (-2.4% y/y). Apparel sales were off 2.7% (-2.6% y/y) but petroleum product sales rose 0.8% (23.3% y/y). Durable goods sales decreased 1.4% (+6.6% y/y) reflecting a 2.9% drop (+9.9% y/y) in sales of machinery. Motor vehicle purchases eased 0.5% (+2.7% y/y). Electrical equipment sales were off 2.9% (+8.2% y/y) but computer equipment sales rose 2.4% (8.1% y/y).

The inventory-to-sales ratio at the wholesale level increased to 1.26, its highest level since September. It remained below, however, a February 2016 high of 1.36.

The I/S ratio for durable goods rose to 1.60, but was well below its recent peak of 1.74 in January 2016. The metals & minerals ratio was steady at 2.02, and the motor vehicle ratio rose to 1.74. The electrical equipment ratio improved to 1.01, but the computer equipment ratio fell to 0.81. The I/S ratio for nondurable goods rose to 0.94, still near its lowest point in three years. The apparel industry ratio increased to 2.03, and the chemical industry ratio was stable at 1.12. The grocery industry ratio held at 0.67, and the petroleum industry ratio held at 0.35.

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

Wholesale Sector - NAICS Classification (%) Jan Dec Nov Y/Y 2017 2016 2015
Inventories 0.8 0.7 0.6 5.0 3.6 2.6 1.1
Sales -1.1 0.8 1.9 10.0 7.6 -0.4 -4.9
I/S Ratio 1.26 1.23 1.23 1.29 (Jan'17) 1.27 1.33 1.32
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