by Mish

This is a negative for first-quarter GDP estimates.

However, the Census Department issued an “Intention to Revise” notice so the whole report and back reports are suspect.

Intention to Revise
Monthly Wholesale sales, inventories, and inventories/sales ratios will be revised based on the results of the 2015 Annual Wholesale Trade Survey. Revised not adjusted and corresponding adjusted estimates are tentatively scheduled to be released on our website on March 24, 2017.
Sales
January 2017 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $463.6 billion, down 0.1 percent from the revised December level, but were up 8.4 percent (±0.9 percent) from the January 2016 level. The November 2016 to December 2016 percent change was revised from the preliminary estimate of up 2.6 percent to up 2.4 percent.
Inventories
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $600.0 billion at the end of January, down 0.2 percent from the revised December level. Total inventories are up 2.2 percent (±0.9 percent) from the revised January 2016 level. The December 2016 to January 2017 percent change was revised from the advance estimate of down 0.1 percent to down 0.2 percent.
Inventories/Sales Ratio
The January inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.29. The January 2016 ratio was 1.37.

Inventor-to-Sales Numbers

Automobile sales at the wholesale level were up 3.2% while inventories fell 3.1%.

Bloomberg Econoday commented: “This points to restocking and a gain for auto production.”

Econoday also noted “stock-to-sales is a healthy 1.29 ratio“.

Here is a picture of the allegedly healthy inventory-to-sales ratio.

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The chart is heading in the right direction, but is it healthy?

As for the need to restock autos, Econoday is in fantasyland. Inventories were so high that the manufacturers had to cut back production.

At best, the whole trade numbers took auto inventories to normal levels. But recall that GDPNow just slashed its GDP estimate, and one of the reasons was weak retail auto sales.

For details, please see GDPNow 1st Quarter Forecast Plunges to 1.3% Following Vehicle Sales and Factory Orders Reports.

Thus, trouble is brewing on the GDP front for the first quarter.

Mike “Mish” Shedlock

Inventories: Another Hit to GDP Estimates for First Quarter

Wholesale inventories declined 0.1% for March while retail inventories rose 0.4% according to Advance Indicators from the Census Department.

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.

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 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 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 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%.

Inventories Surge Led by Autos, Trade Deficit Narrows: A Boost to Second-Quarter GDP

In what is likely to provide a big boost to second quarter GDP numbers, wholesale and retail inventories surged in June according to Advance Indicators from the Census Department.

Wholesale Inventories Rise Slightly Following Big Jumps in December and January

Wholesale inventories rose 0.2% in February. The inventory to sales ratio is elevated.