Global| Dec 07 2018Wholesale Inventories Grow While Sales Decline
Summary
Wholesale inventories increased 0.8% month-on-month (6.9% year-over-year) during October following an upwardly revised 0.7% gain in September. The advance report issued last week reported 0.7% growth in October, while the Informa [...]
Wholesale inventories increased 0.8% month-on-month (6.9% year-over-year) during October following an upwardly revised 0.7% gain in September. The advance report issued last week reported 0.7% growth in October, while the Informa Global Markets Survey expected a 0.3% rise.
Durable goods inventories increased 1.7% (9.3% y/y) in October after a 1.3% gain. Machinery inventories, the largest sector, grew 2.1% (11.7% y/y), while vehicles, the second largest, advanced 3.4% (8.1% y/y). Electrical equipment grew 0.9% (6.4% y/y). Inventories of nondurable goods declined 0.6% (+3.4% y/y) after edging down 0.2% in September. Drug inventories, which make up a quarter of nondurable inventories, rose 0.6% (4.0% y/y). Groceries, the second largest category, edged up 0.2% (-2.0% y/y). Miscellaneous nondurables increased 0.4 (2.2% y/y).
Wholesale sales declined 0.2% during October (+6.8% y/y) after inching up 0.1% (was 0.2%). The Action Economics Forecast Survey looked for 0.5% growth.
Durable goods sales inched down 0.1% (+6.8% y/y) after a 0.2% gain. Electrical equipment, the largest sector, declined 0.9% (+8.3% y/y). Professional and commercial equipment, which includes computers, advanced 1.5% (6.8% y/y), while vehicle sales fell 1.3% (unchanged y/y). Nondurable product sales decreased 0.3% (+6.8% y/y) after edging up 0.1%. Petroleum product sales, the largest category, increased just 0.5% (31.6% y/y) as oil price gains moderated in October. Drug sales grew 0.3% (5.5% y/y) while groceries gained 0.7% (-1.8% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level rose to 1.28, the third increase in four months. The I/S ratio for durable goods jumped to 1.63 from 1.60, the highest level in over a year. The machinery ratio increased to 2.56 from 2.54, while motor vehicles surged to 1.69 from 1.62. The I/S ratio for nondurable goods was unchanged at 0.96. The petroleum industry I/S ratio fell to 0.35, a four-year low. The drug industry I/S remained at 1.06.
The wholesale trade figures and oil prices are available in Haver's USECON database. The expectations figure for inventories is contained in the MMSAMER database. Expectations for sales are in the AS1REPNA database.
| Wholesale Sector - NAICS Classification (%) | Oct | Sep | Aug | Oct Y/Y | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Inventories | 0.8 | 0.7 | 0.9 | 6.9 | 3.6 | 2.2 | 1.3 |
| Sales | -0.2 | 0.1 | 0.7 | 6.8 | 7.4 | -1.3 | -4.9 |
| I/S Ratio | 1.28 | 1.27 | 1.26 | 1.28 (Oct '17) | 1.30 | 1.35 | 1.33 |
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
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