Wholesale inventories in June rose 0.7% vs a Bloomberg Econoday consensus of 0.6%.
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.
Diving Deeper
Diving deeper into the Monthly Wholesale Trade Report, it’s not just autos that have an anomaly.
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.
Synopsis
People are eating more and taking more prescription drugs. Outside of autos, Econoday labels this a “very positive” report. Really?
Mike “Mish” Shedlock
Alcohol was up 3.1%, you’re welcome.
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Exactly. Not only are they eating more and taking more drugs, they are drinking more, and for what it’s worth, buying more farm products, and paper.
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That fits in. Drinks, drugs, and food. What can go wrong with that?
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These are not adjusted for cost right? It could just be that drugs, groceries, and gas are more expensive.
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Another initial report that is revised multiple times … so take these numbers with a dose of salt.
June 2016 sales as initially reported … $444.596 billion
June 2016 sales in current report after revisions … $441.720 billion
June 2016 inventories as initially reported … $590.864 billion
June 2016 inventories in current report after revisions … $583.150 billion
June 2016 initial report
https://www2.census.gov/wholesale/pdf/mwts/historic/mwts_201606.pdf
Current report
https://www.census.gov/wholesale/pdf/mwts/currentwhl.pdf
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Could the rise in groceries indicate inflation growth? Sorry serious question.
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For one or two months I do not know that we can conclude anything. My point was this was not a strong report as the numbers looked and were touted by the media.
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“For the last two months, drugs sale rose a collective and whopping 4.6%!”
So the drug pushers are doing well.
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Sounds like doctors diagnosed more depression and anxiety, proscribed anti – depressants and anti anxiety meds which automatically lends itself to over eating.
It the truth!! Check it out!!😱
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Talked to fresh food manager at Publix. He said fresh produce sells $10000 a week more than meat dept. he said that was never the case before. Fresh produce prices soaring, meat prices falling.
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Reblogged this on World4Justice : NOW! Lobby Forum..
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Inflation ,people buy now just to keep ahead of spending. Deflation especially in real estate produce some big losers. The ideal steady as you go economy is a physical impossibility in a Capitalist society. There is no such thing as ( even exchange) When inflation is severe government simply replaces the old money with a new denomination. I’ve lived true it.
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In real estate supply is expressed in terms of months of sales. In autos supply is expressed in days on the lot. If auto inventory were expressed in terms of months of supply, then there is 1.78 months of inventory at last months sales rate. Ironically 1.78 months of auto inventory is an over-supply condition while 4 months is considered a scarcity in real estate.
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People could be stocking up on “free drugs” because of fear Medicaid might be cut and healthcare uncertainty.
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