September 2011 Wholesale Sales Contines Strong YoY Growth

Wholesale sales has been a volatile data series – up one month, down another.  September 2011 is a down month – but this data series has stronger growth than most other sectors of the economy with 14.8% year-over-year growth (7.8% inflation adjusted).

US Census Headlines:

  • sales up 0.5% month-over-month, up 15.0% year-over-year
  • inventories down 0.1% month-over-month, sales-to-inventory ratios up were 1.18 one year ago – and are now 1.15

Econintersect Analysis:

  • sales down 3.4% month-over-month, and up 14.8% year-over-year
  • sales (inflation adjusted) down 3.9% month-over-month, up 7.8% year-over-year
  • inventories up 0.5% month-over-month, sales-to-inventory ratios 1.12 which is lower than the historical channel for this  month of the year (good:  inventories are not growing).

The three month trend is up for both unadjusted and inflation adjusted wholesale sales.  However, a six month trend could be considered flat (the rate of growth is constant).  To get to the bottom line, wholesale sales are at record levels for Septembers.

July 2011 broke a 4 month streak of record Wholesale sales data. Now wholesale sales have hit new monthly record highs 6 of the last 7 months.

Overall, the inventory-to-sales ratios (a rising ratio is an indicator of economic slowing) rose to the high end of a normal range in July.  These ratios are now at the low end of the range, and at historically low levels for Septembers.

Caveats on the Use of this Index

The data in this index continues to be revised up to 3 months following initial reporting.  The revision usually is not significant enough to change the interpretation of each month’s data in real time.  Generally there are also annual revisions to this data series.

The methodology used by US Census to seasonally adjust the data is not providing a realistic understanding of the month-to-month movements of the data.  One reason is that US Census uses data over multiple years which includes the largest modern recession which likely distorts the analysis.  Further, Econintersect believes there has been a fundamental shift in seasonality in the aftermath of the Great Recession of 2007 – the New Normal.

As economic indicators go, wholesale sales and inventories are poor at spotting economic problems.  Wholesale data did not start contracting during the Great Recession until October 2008.  The only portion of wholesale trade data which seems to correspond to general economic conditions is wholesale trade employment.

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