September 2018 Headline Wholesale Sales Improved?

The headlines say wholesale sales improved month-over-month with inventory levels remaining elevated. Our analysis shows a deceleration of the rate of growth for the rolling averages.

Analyst Opinion of this month's Wholesale Sales

Overall, I believe the rolling averages tell the real story - and they declined this month. Even with this month's decline of the unadjusted data, the general trend is showing an improving cycle beginning in 2016.

Inventory levels this month are the high side of normal - and close to 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 3.8 % month-over-month.
  • unadjusted sales year-over-year growth is up 4.9 % year-over-year (it was an upwardly adjusted +8.7 % YoY last month)
  • unadjusted sales (but inflation adjusted) up 3.8 % year-over-year
  • the 3 month rolling average of unadjusted sales decelerated 0.7 % month-over-month, and up 8.9 % year-over-year.

 

  • unadjusted inventories up 5.1 % year-over-year (decelerated 0.1 % month-over-month), unadjusted inventory-to-sales ratio is 1.29 which is near recessionary levels.

US Census Headlines based on seasonally adjusted data:

  • sales up 0.2 % month-over-month, up 9.2 % year-over-year (it was reported sales up 7.8 % last month was published 9.8 % YoY)
  • inventories up 0.4 % month-over-month - 5.2 % year-over-year,
  • inventory-to-sales ratios were 1.29 one year ago - and are now 1.26.
  • expectations for inventory growth from Econoday was consensus range of -0.3 % to 0.5 % (concensus 0.3%).

 

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.

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