The Monthly Wholesale Trade Report is produced by the US Department of Commerce, Bureau of the Census based on a survey of about 4,500 wholesale merchants. The report presents three statistic: Monthly sales, monthly inventories and the inventory to sales ratio. The data is broken down into a small number of industry categories.
In October, wholesale sales increased by 1.0 percent over the prior month to $435.3 billion. This is 6.4 percent higher than in October of 2012. In a good sign for the economy, most of the year over year growth has come from durable goods rather than goods for immediate consumption, with machinery leading the pack (up 21.2 percent) followed by lumber, hardware and automobiles. Wholesale sales of farm and agricultural products fell substantially on a year over year bases (down 8.5 percent) reflecting in part a bubble in grain prices in 2012. Inventories also rose in October but at a slower rate than sales (up 3.3 percent to $514.1 billion). Automotive inventories surged by 2.7 percent in October after falling substantially in the prior month. Overall inventory to sales ratios remained constant over the past three months at 1.18, which is down from 1.22 in October of 2012.
Activity at the wholesale level can be a precursor for consumer trends and changes in overall economic activity. If inventory growth lags sales growth, then it is likely that firms will begin to increase production, while an increase in the inventory to sales ratio is a sign of a weakening economy. The slow growth in inventories suggests that manufacturers are doing a good job in managing inventory since the end of the recession.
Subscribe to the Monthly Manifesto
Why subscribe to the JDA Monthly Manifesto?
This monthly economic newsletter is one way John Dunham & Associates assists clients and friends to better communicate and manage issues using sound economic and fiscal research — what we call Guerrilla Economics.
For more information on how we can help on your legislative issues, please contact us at 212-239-2105.