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May 2017 Headline Wholesale Sales Down

By Kurt Osterberg · On July 11, 2017

The headlines say wholesale sales were down month-over-month with inventory levels remaining at levels associated with recessions. Our analysis disagrees.

Analyst Opinion of this month’s Wholesale Sales

The decline this month in the headline data could be attributed totally to petroleum products. Overally, I believe the rolling averages tell the real story – and they significantly improved this month. There is an obvious improving trendline in wholesale – but recently this series became volatile.

Inventory levels remain at recessionary levels..

To add to the confusion, year-over-year employment changes and sales growth do not match.

Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

unadjusted sales rate of growth accelerated 4.5 % month-over-month.

unadjusted sales year-over-year growth is up 9.2 % year-over-year (it was +4.8 % last month)

unadjusted sales (but inflation adjusted) up 7.0 % year-over-year

the 3 month rolling average of unadjusted sales accelerated 1.3 % month-over-month, and up 7’4 % year-over-year.

unadjusted inventories grew 1.9 % year-over-year up 0.1 % month-over-month), unadjusted inventory-to-sales ratio is 1.22 which is at recessionary levels.

US Census Headlines based on seasonally adjusted data:

sales down 0.5 % month-over-month, up 6.2 % year-over-year

inventories up 0.4 % month-over-month, inventory-to-sales ratios were 1.34 one year ago – and are now 1.29.

Expectations for inventory growth from Bloomberg / Econoday were between 0.2 % to 0.3 % (consensus +0.3 %)

Wholesale sales were at record highs for almost two years – until 2015 where they contracted year-over-year (and the contraction continues). Overall, the inventory-to-sales ratios (a rising ratio is an indicator of economic slowing) is extremely high.