U.S. Wholesale Sales & Inventories Rise Moderately

Inventories at the wholesale level rose 0.4% (+3.3% y/y) during February following an unrevised decrease of 0.2% in January. Durable goods inventories were up 0.2% (+1.7% y/y) after January's 0.2% decline. Motor vehicle stocks added 0.4% (+1.6% y/y), as did furniture (+4.2% y/y). Inventories of computers and peripherals edged up 0.1% (+11.0% y/y), while general machinery stocks eased 0.1% (-2.1% y/y).

Inventories of nondurable goods advanced 0.7% (5.9% y/y) in February after a modest 0.2% decrease in January. Petroleum inventories rebounded by 2.8% (+39.4% y/y) from a 0.9% fall in January. Chemical stocks rose 0.7% (+0.2% y/y) after a 2.8% drop in January. Apparel inventories were also down in February, by 0.7% (-9.7% y/y) following a 1.1% decrease the month before, while paper and products gained 1.4% (-1.8% y/y) after falling 1.5% in January.

Wholesale sales were up 0.6% (5.3% y/y) in February after January's 0.3% increase, which was revised from a 0.1% decrease. A 0.2% rise was expected in the Action Economics Forecast Survey. Nondurable goods sales rose 0.7% (+7.6% y/y) following a 0.1% decrease in January. Petroleum sales gained 0.6% (+61.1% y/y), and chemical sales were up 1.1% (+7.6% y/y). Apparel sales dropped 2.3% (-10.7% y/y), a second successive decline with January's 1.8%.

Sales by durable goods wholesalers increased 0.4% in February (+2.8% y/y) following 0.7% in January. The February gains came in computers, up 1.4% (-2.0% y/y) and machinery, 2.3% (+0.8% y/y). Electrical equipment sales also increased, by 0.7% (+5.4% y/y). But motor vehicle distributors' sales declined 5.0% (+2.9% y/y) and furniture sales lost 2.6% (-0.1% y/y); that latter decline followed a 4.2% drop in January.

Wholesalers' inventory-to-sales ratio was flat at 1.28. The ratio has declined persistently over the last year from 1.36 in January and February 2016. The durable goods ratio of 1.62 was down from 1.71 in February 2016. The machinery I/S ratio was 2.92 this February, down from 3.16 a year ago. The motor vehicles ratio was 1.76, up from 1.67 in January, but down from the year-earlier 1.86. The furniture I/S ratio was 1.63 in the latest report, similar to January's 1.59, but well up from December's 1.49; it had been 1.64 a year ago. The I/S ratio in computers and equipment was 0.89, compared to 0.90 in January and 0.82 in February 2016.

In the nondurable goods sector, the I/S ratio was 0.97, the same as January's revised level and down from 1.03 a year ago. The petroleum industry ratio was 0.45, a tick higher than January's 0.44. This ratio has hovered in that range since last spring; a year ago it was 0.54. The ratio in the chemical sector has trended lower over the past year, reaching 1.12 this February and January compared to 1.28 in February 2016.

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