U.S. Wholesale Inventories Rise Modestly in July While Sales Surge
by:Tom Moeller
|in:Economy in Brief
Summary
- Inventory gain extends trend of moderate accumulation.
- Jump in sales concentrates in nondurables.
- Inventory-to-sales ratio continues sideways movement.
Wholesale trade inventories increased 0.2% (0.4% y/y) during July after holding steady in June, revised from 0.2%, and an unrevised 0.5% May gain. The increase compared to a 0.3% rise expected in the Informa Global Markets Survey and compared to a 0.3% gain in the advance report issued two weeks ago.
Durable goods inventories edged 0.1% higher last month (2.6% y/y) following a 0.2% decline. Machinery inventories, the largest sector, fell 0.3% (+12.0% y/y) while motor vehicles & parts, the second largest grouping, edged 0.1% higher (11.8% y/y). Electrical equipment inventories rose 0.5% (-4.0% y/y). Inventories of nondurable goods increased 0.5% (-3.2% y/y) following a 0.4% rise. Drug inventories, which make up a quarter of nondurable inventories, rose 2.5% (4.4% y/y). Grocery inventories, the second largest category, eased 0.6% (-2.3% y/y). Petroleum inventories dropped 1.7% (-9.1% y/y). Apparel inventories edged 0.1% higher (-15.1% y/y) and chemical inventories weakened 0.5% (-8.8% y/y).
Sales at the wholesale level strengthened 1.1% (2.9% y/y) in July after a 0.3% June decline, revised from -0.6%. A 0.2% July rise had been expected in the Action Economics Forecast Survey.
Durable goods sales increased 0.5% in July (3.2% y/y) after a 0.6% increase. Sales of electrical equipment, the largest sector, rose 0.2% (9.7% y/y), the same as in June. Professional and commercial equipment sales, which includes computers, jumped 1.2% (6.0% y/y), while vehicle sales rose 0.4% (5.4% y/y). Nondurable product sales improved 1.6% (2.6% y/y) after declining 1.6% in June. Petroleum product sales, the largest category, rose 3.9% (1.3% y/y). Drug store sales jumped 1.5% (9.3% y/y) while grocery store sales gained 0.3% (2.8% y/y). Sales of apparel jumped 2.5% (3.7% y/y) while chemical sales declined 0.9% (-2.9% y/y). Paper sales rose 0.9% (-2.1% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level eased to 1.35 in July from 1.36 in June and has been moving sideways for the last year.
The I/S ratio for durable goods was minimally changed at 1.80. The machinery ratio declined to 3.09 while motor vehicles rose to 1.89. The I/S ratio for nondurable goods eased to 0.94, down from 1.01 early last year. The petroleum industry I/S ratio slipped to 0.32, and the drug industry moved up to 1.02. Apparel's I/S ratio of 2.19 stood below its 2.67 level one year earlier.
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 from 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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