Wholesale Inventories Rose 0.3 Percent in September: Unwarranted Inventory Build?

The Census Bureau reported wholesale trade inventories rose 0.3 percent in September. This was an expected result given the Census Bureau's advance estimates.

Sales

September 2017 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $480.5 billion, up 1.3 percent (±0.4 percent) from the revised August level and were up 8.5 percent (±1.2 percent) from the September 2016 level. The July 2017 to August 2017 percent change was revised from the preliminary estimate of up 1.7 percent (±0.4 percent) to up 1.9 percent (±0.4 percent).

Inventories

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $609.5 billion at the end of September, up 0.3 percent (±0.4 percent) from the revised August level. Total inventories were up 4.6 percent (±0.7 percent) from the revised September 2016 level. The August 2017 to September 2017 percent change was unrevised from the advance estimate of up 0.3 percent (±0.4 percent).

Inventories/Sales Ratio

The September inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.27. The September 2016 ratio was 1.32.

Inventories/Sales Ratio Since 1992

The Fred data is one month old. In August, the inventory-to-sales ratio was 1.28, this month it is slightly lower at 1.27.

Is normal the period from 2003 to 2007 and 2010 to 2014, or is it 1992 to 2001?

Regardless the chart is a bit skewed by hurricane replenishment. I strongly suspect an unneeded inventory build is taking place.

Mike "Mish" Shedlock

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