June 2018 Headline Wholesale Sales Slow

The headlines say wholesale sales were down month-over-month with inventory levels remaining elevated. Our analysis also shows an acceleration of the rate of growth for the rolling averages.

Analyst Opinion of this month’s Wholesale Sales

The decline this month in the headline data was insignificant. Overall, I believe the rolling averages tell the real story – and they improved this month. The short term trends are mixed – with the long term trends showing an improving cycle beginning in 2016.

Inventory levels this month are are the high side of normal – but not recessionary.

To add to the confusion, year-over-year employment changes and sales growth do not match.

Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

unadjusted sales rate of growth decelerated 4.9 % month-over-month.

unadjusted sales year-over-year growth is up 7.1 % year-over-year (it was an upwardly adjusted +12.0 % last month)

unadjusted sales (but inflation adjusted) up 3.3 % year-over-year

the 3 month rolling average of unadjusted sales up 0.9 % month-over-month, and up 9.9 % year-over-year.

unadjusted inventories up 5.0 % year-over-year (decelerated 0.6 % month-over-month), unadjusted inventory-to-sales ratio is 1.21 which is marginally above normal but well below recessionary levels.

US Census Headlines based on seasonally adjusted data:

sales down 0.1 % month-over-month, up 10.2 % year-over-year

inventories up 0.1 % month-over-month, inventory-to-sales ratios were 1.31 one year ago – and are now 1.25.

Expectations for inventory growth from Nasdaq / Econoday were between 0.0 % to 0.0 % (consensus +0.0 %)

Wholesale sales were at record highs for almost two years – until 2015 where they contracted year-over-year – this contraction ended in 2017. Overall, the inventory-to-sales ratios is slowly returning to normal.