U.S. Wholesale Inventories Decline Again in June
Summary
- Inventories of durable goods edge down, while nondurables continue their rapid retreat.
- Sales fall as durable goods purchases weaken.
- Inventory-to-sales ratio edges up to match historic high.
Wholesale inventories declined 0.5% (+1.3% y/y) in June. The Informa Global Markets Survey expectation was for a 0.3% drop. That was the sixth decline in the past seven months. The modest slide this year reflects a normalization after the surge in inventories in 2021 and the first half of 2022 during the worst of the supply chain issues.
Durable goods inventories slipped 0.1% (9.7% y/y) in June, after a downward revised 0.3% gain in May. Metals and minerals inventories fell 3.5% (-4.2% y/y) while professional and commercial equipment declined 0.8% (-4.6% y/y). Lumber and other construction materials fell 1.2% (-10.7% y/y). These declines were partially offset by a 1.3% rise (24.3% y/y) in machinery, equipment and supplies and a 1.1% rise (19.0% y/y) in motor vehicles and parts.
In the nondurable goods sector, inventories declined 1.2% (-4.7% y/y) in June, the seventh consecutive drop, after a downward revised 1.6% decline in May. Inventories fell in every major sector in June. The largest declines were in apparel, groceries, farm products, and petroleum and products. Apparel inventories fell 1.7% (-3.2% y/y), grocery products declined 1.5% (-4.5% y/y), farm products fell 2.0% (-38.3% y/y), while petroleum inventories fell 3.1% (-16.0% y/y).
Wholesale sales fell 0.7% (-6.7% y/y) in June after downward revised 0.5% decline in May. The Action Economics Forecast Survey expected an unchanged reading.
Durable goods sales fell 0.5% in June (-2.7% y/y). That was the third decline in the past four months. The biggest decline was in miscellaneous durable goods, which fell 4.9% (-19.1% y/y). This industry group is mainly comprised of sporting, recreational, toy, hobby, and jewelry goods. Changes in nondurable goods sales generally reflect petroleum and products, which fell 3.5% in June.
The wholesale inventory-to-sales (I/S) ratio edged higher to 1.41 in June from 1.40 in May. Apart from the surge during the pandemic, that matched the highest IS ratio reading in the measure’s more than 40-year history. The I/S ratio for durable goods increased to 1.86 while the ratio for nondurable goods slipped to 1.00.
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.
Peter D'Antonio
AuthorMore in Author Profile »Peter started working for Haver Analytics in 2016. He worked for nearly 30 years as an Economist on Wall Street, most recently as the Head of US Economic Forecasting at Citigroup, where he advised the trading and sales businesses in the Capital Markets. He built an extensive Excel system, which he used to forecast all major high-frequency statistics and a longer-term macroeconomic outlook. Peter also advised key clients, including hedge funds, pension funds, asset managers, Fortune 500 corporations, governments, and central banks, on US economic developments and markets. He wrote over 1,000 articles for Citigroup publications. In recent years, Peter shifted his career focus to teaching. He teaches Economics and Business at the Molloy College School of Business in Rockville Centre, NY. He developed Molloy’s Economics Major and Minor and created many of the courses. Peter has written numerous peer-reviewed journal articles that focus on the accuracy and interpretation of economic data. He has also taught at the NYU Stern School of Business. Peter was awarded the New York Forecasters Club Forecast Prize for most accurate economic forecast in 2007, 2018, and 2020. Peter D’Antonio earned his BA in Economics from Princeton University and his MA and PhD from the University of Pennsylvania, where he specialized in Macroeconomics and Finance.
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