Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories. Why Investors Care
| Released on 8/8/08 For Jun 2008 | ||||||||
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Highlights
Inventories at the wholesale level rose 1.1 percent in June, a sharp jump but well below a 2.8 percent rise in sales at the wholesale level. The inventory-to-sales ratio in fact fell 2 tenths to a record low 1.06 to indicate that inventories are historically lean. Special factors in the data are price effects tied to energy and food and to the severe contraction underway in the auto sector. Wholesale inventories of nondurables, inflated by oil and food prices, jumped 1.8 percent while sales of nondurables jumped 4.1 percent. Inventories of petroleum products jumped 8.3 percent in the month with inventories of farm products up 7.1 percent. Inventories of paper products, where price increases are also underway,, rose 3.1 percent. Note that the jump in petroleum inventories still lagged the price-inflated 12.7 percent jump in petroleum sales and pulled the inventory-to-sales ratio 1 tenth lower to 0.23. This is a price-based measure; in volume terms sales of petroleum products are down slightly according to EIA data.
Wholesale inventories of durables rose 0.6 percent vs. a 1.3 percent rise for wholesale sales of durables. Inventories of autos rose 0.5 percent in the month, far out of line with a 4.7 percent drop in sales and pushing the inventory-to-sales ratio up 9 tenths in the month to 1.63. High inventories pose yet another threat to this sector. Inventories of machinery dipped for a second month despite solid gains in sales, offering a hint that production of capital goods may be on the increase in the months ahead.
Factory inventories, previously reported, rose a 1.0 percent, and together with the 1.1 percent rise at the wholesale level point to strength in the inventory component for second-quarter GDP revisions. Inventory data for June and with it the second quarter will be completed with the business inventory report on Wednesday which will include retail inventories.
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