U.S. Wholesale Inventories Are Little Changed in May
by:Tom Moeller
|in:Economy in Brief
Summary
- Inventories of durable goods increase, while those of nondurables decline.
- Sales fall slightly as nondurable goods purchases weaken; durables sales rise.
- Inventory-to-sales ratio edges higher.
Wholesale inventories eased slightly (+3.7% y/y) in May following declines in four of the prior five months. Inventory growth has slowed considerably since a 25.6% y/y peak increase in June 2022. A 0.1% easing had been expected in the Informa Global Markets Survey.
Durable goods inventories rose 0.6% (9.7% y/y) in May, the same as during April. Machinery inventories jumped 1.5% (25.9% y/y) while metals inventories strengthened 1.4% (0.9% y/y). Motor vehicle & parts inventories rose 1.1% (20.7% y/y). Professional equipment inventories rose 0.1% (-1.7% y/y). These gains were offset by a 0.3% decline (+10.7% y/y) in electrical equipment inventories and a 0.3% drop (-5.2% y/y) in furniture & home furnishings inventories.
In the nondurable goods sector, inventories declined 1.0% (-4.7% y/y) in May and declined for six straight months. Farm product inventories fell 3.9% (-39.0% y/y) while paper inventories fell 3.1% (-8.9% y/y), the same as in April. Petroleum inventories dropped 1.9% (-15.4% y/y). Apparel inventories were off 1.0% (+3.4% y/y) and grocery product inventories weakened 1.4% (-1.8% y/y). Chemical inventories rose 1.3% (-1.1% y/y) following eight consecutive monthly declines.
Wholesale sales eased 0.2% (-4.0% y/y) in May after holding steady in April. The Action Economics Forecast Survey expected a 0.3% monthly gain.
Durable goods sales rose 0.8% in May (-1.9% y/y) following two months of decline. Motor vehicle & parts sales rose 3.2% (16.3% y/y) while machinery purchases increased 1.0% (6.2% y/y). Professional equipment sales rose 1.0% (-3.1% y/y) while furniture & home furnishings sales surged 3.5% (-0.5% y/y). Electrical machinery sales edged 0.3% higher (-3.1% y/y).
Sales of nondurable goods declined 1.0% (-5.8% y/y) in May following a 0.6% rise. Petroleum sales fell 3.9% (-21.7% y/y and chemical sales dropped 3.7% (-9.9% y/y). Apparel sales fell 2.7% (-16.1% y/y) and paper product sales declined 1.5% (-9.7% y/y). Grocery product sales improved 0.1% (0.5% y/y).
The wholesale inventory-to-sales (I/S) ratio edged higher to 1.41 in May from 1.40 in April. It remained near the highest ratio since June 2020. The I/S ratio in the durable goods sector eased to 1.85 and compared to a low of 1.47 in June 2021. The I/S ratio for nondurable goods held steady at 1.01.
The wholesale trade figures 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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