Wholesale and Retail Inventories Rise Led by Autos: Diving Into Seasonal Adjustments

by Mish

Yet, despite falling sales and a warning from GM, durable goods orders for autos and auto parts rose 1.2% in May. That was on top of a 0.5% gain in April.

The auto mystery continues as today’s advance trade data from the Census Department shows Wholesale inventories rose 0.3% and retail inventories rose 0.6%. The auto-related details were even more interesting.

Auto imports for the past two months are down a total of 4.6%. Auto exports for the past two months are up a net total of 0.7%.

This helped the balance of trade data but for the quarter, the balance of trade is still negative as noted in Trade Deficit Narrows as Exports Rise and Imports Drop: 2nd Quarter Trade Impact Still Negative.

Inventories

Adjusted vs. Unadjusted Numbers

• Unadjusted, merchant inventories -0.9% in May and -0.9% in April
• Adjusted, merchant inventories +0.4% in May and -0.3% in April
• Unadjusted, retail inventories -0.7% in May and -0.4% in April
• Adjusted, retail inventories +0.6% in May and -0.2% in April
• Unadjusted, retail motor vehicles -1.0% in May and -0.1% in April
• Adjusted, retail motor vehicles +1.1% in May and -0.2% in April

That’s a 2.1 percentage point difference between motor vehicle inventories in May, adjusted vs. unadjusted.

Manufacturers’ Motor Vehicles and Parts Inventories, Seasonally Adjusted vs Unadjusted

The above chart shows manufacturers’ inventories of motor vehicles and parts.

The swings in deal inventories, month-over-month, unadjusted vs seasonally adjusted for the month of May are not wild.

Fred does not have the data I was looking for, retail trade motor vehicles and parts inventories seasonally adjusted and unadjusted.

I will do a followup report with data from the Census Bureau.

Auto Sales vs. Inventory Build

1. June 26: GM Says “Market is Definitely Slowing” Lowers Outlook for Vehicle Sales
2. June 1: Motor Vehicle Sales Flat, Hope Turns to Second Half: What About Fleet Sales? Incentives?
3. May 2: Auto Sales Puke Again: Year-Over-Year Totals: GM -6%, Ford -7.2%, Toyota -4.4%, Fiat-Chrysler -7.0%
4. April 3: Auto Sales Final Numbers: Down 5.7%, Two-Year Low; Don’t Worry, It’s Just a Plateau!

Despite slow sales, auto inventories are building.

If these numbers hold, inventories will likely, but not necessarily, add to second-quarter GDP.

For the inventory valuation discussion, please see GDP Estimation Crapshoot: When Errors Balance Out and When They Don’t

Mike “Mish” Shedlock