Skip to main content

Inventories Look Historically Lean Compared to Sales, But Appearances Deceive

Inventories look lean but huge problems lurk around the corner.
  • Author:
  • Publish date:
Inventories and sales data from the commerce department, chart by Mish

Inventories and sales data from the commerce department, chart by Mish

Historically speaking, the inventory-to-sales ratio is very low (see chart below). 

Inventory-to-Sales Ratio 

Inventories and sales data from the commerce department, chart by Mish

Inventories and sales data from the commerce department, chart by Mish

The latest data is from March. I excluded auto dealers because they are having one heck of a time due to chip shortages.

Elsewhere we see "just-in-time" on steroids with an inventory-to-sales ratio of 1.12. 

Recently, inventories have been rising faster than sales. And what if sales falter? 

Top 20 Importers 

"List of top 20 container importers into US. Many on this list have excess inventories, which likely means their maritime volumes will drop as they work off excess inventory. The top 20 container importers represent approx 25% of maritime container volume imports into US."

What About Amazon? 

Supply Chains Won't Return to Normal

Shipping Slows 

Weird Season 

The Big Kicker 

"A lot of items in excess inventory are seasonal & big-ticket. Rather than heavy discounting, we are more likely to warehouse these goods until they sell. It will mean slower shipping volumes, probably most notable in Q4/Q1."

Really!? 

Scroll to Continue

RECOMMENDED ARTICLES

Contrarian Take 

Let's discuss the recent data.

Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?

The advance retail sales reports by the commerce department were stunning. Reports by Target and Walmart strongly suggest something else.

For discussion, please see Target Plunges 25%, What About Yesterday's Big Retail Sales Blowout?

New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

Please note New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions

What will that do to demand for appliances, carpet, furniture, lawn mowers, etc,? 

Frantic Discounts Coming   

 "Rather than heavy discounting, we are more likely to warehouse these goods until they sell."

I expect that idea to explode in a big wave of frantic discounts.

This post originated at MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish