Bad Month for Wholesale Sales in June 2013

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June 2013 wholesale sales and inventories data just had a bad month following two months in a row of good data. This data series is very noisy, and has been on a roller coaster of one good month / one bad month. This analysis is worse than the published headline analysis – and inflation adjusted growth is contracting year-over-year.


Econintersect Analysis:

  • sales rate of growth decelerated 1.5% month-over-month
  • sales year-over-year growth is up 2.4% year-over-year
  • sales (inflation adjusted) down 0.7% year-over-year
  • inventories down 0.1% month-over-month, inventory-to-sales ratio is 1.17 which is historically high for Junes.

US Census Headlines:

  • sales up 0.4% month-over-month, up 5.6% year-over-year
  • inventories down 0.2% month-over-month, inventory-to-sales ratios were 1.20 one year ago – and are now 1.17
  • the market expected an inventory increase of 0.0% to 0.4% (versus the headline -0.2% growth)

Year-over-Year Growth – Wholesale Sales – Unadjusted data (blue line) & Inflation Adjusted Data (red line)

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It is clear wholesale sales remain in a long term downtrend since mid 2011. June sales were at an all time high for Junes (expressed in current dollars).

Wholesale Sales – Unadjusted – $ Millions

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Wholesale sales have hit new monthly record highs 22 of the last 27 months (using current dollars). Overall, the inventory-to-sales ratios (a rising ratio is an indicator of economic slowing) are very low for Mays historically.

Unadjusted Inventory-to-Sales Ratio (blue line, left axis) and Year-over-Year Change Unadjusted Inventory-to-Sales Ratio (red line, right axis)

/images/z wholesale1.PNG

The red line showing year-over-year change is what is important – and this line seems to show a growing inventory trend since 2010.

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.

Econintersect determines the month-over-month change by subtracting the current month’s year-over-year change from the previous month’s year-over-year change. This is the best of the bad options available to determine month-over-month trends – as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).

This series is NOT inflation adjusted. To make this adjustment Econintersect uses the PPI – subindex Total Wholesale AWHLTRAWHLTR.

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.

All Employees – Wholesale

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3 replies on “Bad Month for Wholesale Sales in June 2013”

  1. “United States of Arabia” is the real deal in my book.  we shall see but there is a point here where the American people need not be bothered by the high cost of oil, fuel, natural gas etc. (ironically natural gas keeps hitting one low after another.  coal mines are being shuttered.  where is the “over a barrel” thing again?)  again “we shall see” but if that trade deficit suddenly evaporates over the next six to nine months i think you’ll see if not a big jump in wholesale sales then certainly a big move higher in inventories…which does of course equate to GDP growth.

  2. as a follow on…still the go to guy in my book on the macro front i would love to hear a speculative take on your part vis a vis micro relative to early adoption of all electric vehicles by the US economy at large.  My first take is HIGHLY disruptive…the implications seem truly profound and staggering actually…but i’m just some regular Joe here pondering what i perceive to be the manifest reality of it all.  I have no numbers to back up this claim…a claim which is obviously still “at the margin BARELY” since we’re only talking a couple hundred thousand vehicles here (and i’m throwing in the Nissan Leaf just for good measure here.) i have titled my thought process “savior or anti christ?” when it comes to Tesla in case you’re wondering where my thought process is.

  3. @lkofenglish 
     
    it will be interesting to watch how the electric vehicle dynamic plays out.  without some technology changes, electric vehicles are a flash in the pan – but i am positive technology changes are coming  (which will either favor electric or conventional powered cars).  however, autos are becoming less and less a factor in the economy considering people are driving less, and cars are being changed out at a slower and slower rate.

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