Econoday was happy with the results but let’s dive a little deeper.
Wholesale inventories rose a sharp 0.7 percent in June in what was a wanted build given a likewise 0.7 percent rise in sales. The stock-to-sales ratio is unchanged at a lean 1.29. If there is an imbalance, it’s inventories of autos which rose 1.4 percent while sales fell 0.5 percent. Otherwise this a very positive report, pointing at the same time to sales growth and inventory growth.
Analyzing the Skew
- For the month of June, sales rose 0.7% but durable goods sales were flat.
- Nearly the entire sales charge came from drugs, groceries, and petroleum. This does not merit any economic cheerleading.
- For the last two months, durable goods sales rose a collective 0.1%. Durable goods inventories rose a collective 1.1%.
- For the last two months, automotive sales declined a collective 1.1% while auto inventories rose a whopping 2.0%. Once again, this does not merit any economic cheerleading.
- For the last two months, drugs sale rose a collective and whopping 4.6%! Not only is the percentage high, drugs is the single biggest category, by economic value, in the entire report. To repeat, this does not merit any economic cheerleading.
- Drugs also fueled inventories. The two-month collective inventory total is 2.6%.
- For the last two months, grocery sales rose a collective 1.8%! Groceries is the second largest category, by economic value, in the entire report. The two-month collective inventory total for groceries 0.9%, all in June.
- Electrical, the third largest category in the report, was up 1.3%. This is the only significant category in the report meriting any cheerleading.
- Petroleum sales rose 1.9% in June. By value, Petroleum is the fourth largest category in the report. That rise is on the heels of a 6.9% drop in May.
People are eating more and taking more prescription drugs. Outside of autos, Econoday labels this a “very positive” report. Really?
Mike “Mish” Shedlock