The Econoday comments on wholesale trade are amusing.

Business inventories were unchanged in September while sales however, tied largely to hurricane effects at the retail level, surged 1.4 percent. The mismatch pulls the inventory-to-sales ratio down 2 notches to 1.36 vs a long run at 1.38 and compared against a fat looking 1.40 in September last year.

With retail sales surging 2.1 percent in this report, retail inventories are especially lean, down 0.9 percent and largely reflecting autos where inventories fell 2.4 percent during the post-hurricane replacement surge of September. Wholesale inventories rose 0.3 percent in the month. against a 1.3 percent jump in sales, with manufacturer inventories up 0.7 percent against a 0.8 percent sales rise.

The lack of auto inventories among retailers will filter back through both the wholesale and manufacturing sectors which will have to rebuild their auto inventories. But autos are only one factor. The general need to build inventory to meet demand looks to be an increasing strength for the economy.

Inventory-to-Sales Analysis

Image placeholder title

RECOMMENDED ARTICLES

While admitting that sales were distorted by the hurricanes, Econoday cites the "increasing strength" of the economy.

The above chart puts that "fat looking" inventory-to-sales ratio of 1.40 in September of 2016 vs. today's hurricane-influenced "general need to build inventory" 1.36 ratio into proper perspective.

Mike "Mish" Shedlock

Wholesale Trade: Inventory-to-Sales Ratios Extremely Elevated

Wholesale trade inventories rose 0.1% for the month compared to Bloomberg Econoday expectations of a 0.2% rise.

Wholesale Inventories Jump 0.7%, Retail Up 0.1%: Impact on GDP?

The Census Bureau Advance Inventory Report shows wholesale inventories rose 0.7% while retail inventories were up 0.1%.

Wholesale and Retail Inventories Jump, Trade Deficit Improves Slightly: GDP and Hurricane Impact?

The Census Bureau’s Advance Economic Indicators show a slight improvement in exports and rising retail and wholesale inventories.

Wholesale Inventories Rose 0.3 Percent in September: Unwarranted Inventory Build?

The Census Bureau reported wholesale trade inventories rose 0.3 percent in September. This was an expected result given the Census Bureau's advance estimates.

Wholesale and Retail Inventories Rise

Census bureau reports show wholesale and retail inventories jumped in November.

Wholesale Inventories Crash, Led by Autos

Wholesale inventories plunged 5% in the Census Bureau Wholesale Trade Report for February, released today.

Retail Sales Jump Due to Hurricane Impact: GDP Impact?

Retail sales in September increased 1.6 percent from August. Hurricane impacts are clearly in play.

Inventory to Sales Ratios: What’s Really Going On?

On November 15, the Census Bureau released its monthly report on Manufacturing and Trade Inventories and Sales. Despite the fact that is it mid-November, we are just now getting data for September.

Wholesale Inventory Build Continues as Retail Sales Flounder

Wholesale inventories rose 1.0% nearly matching the consensus 1.1% estimate.