Briefly – wholesale sales are up over 15.4% year-over-year (YoY using unadjusted data) in March 2011. This is a historical high. Inventory-to-Sales ratios are historically low. The bottom line is that, based on wholesale sales data, the economy appears to be stronger as of March than some analysis has estimated.
Sales. The U.S. Census Bureau announced today that March 2011 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 $392.0 billion, up 2.9percent (+/-0.5%) from the revised February level and were up 15.4 percent (+/-1.2%) from the March 2010 level. The February preliminary estimate was revised upward $1.9 billion or 0.5 percent. March sales of durable goods were up 2.3 percent (+/-0.9%) from last month and were up 13.6 percent (+/-2.1%) from a year ago. Sales of lumber and other construction materials were up 7.3 percent from last month and sales of metals and minerals, except petroleum, were up 6.7 percent. Sales of nondurable goods were up 3.4percent (+/-0.7%) from last month and were up 16.8 percent (+/-1.4%) from last year. Sales of petroleum and petroleum products were up 7.9 percent from last month and sales of chemicals and allied products were up 6.3 percent.
Inventories. Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $442.9 billion at the end of March, up 1.1 percent (+/-0.2%) from the revised February level and were up 13.3 percent (+/-1.2%) from a year ago. The February preliminary estimate was revised upward $0.1billion. End-of-month inventories of durable goods were up 0.4percent (+/-0.4%) from last month and were up 8.8 percent (+/-1.2%) from last March. Inventories of machinery, equipment, and supplies were up 2.3 percent from last month, while inventories of computer and computer peripheral equipment and software were down 3.9 percent. End-of-month inventories of nondurable goods were up 2.0 percent (+/-0.4%) from February and were up 19.9 percent (+/-2.3%) compared to last March. Inventories of drugs and druggists’ sundries were up 3.0 percent from last month and inventories of chemicals and allied products were up 2.7 percent.
Inventories/Sales Ratio. The March inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.13. The March 2010 ratio was 1.15.
With wholesale sales at such high levels, it is hard to argue that the economy is slowing. Wholesale is the zone between the manufacturers and the retailers. Surprisingly, the inventory/sales ratios when using unadjusted data is also at historic lows. Some pundits only looked at the increase in inventory levels MoM – and ignored that sales massively jumped. Inventories must be relative to sales volumes – and cannot be analyzed independently.
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