August 2018 Headline Wholesale Sales Improve

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 short-term trends are showing an improving cycle beginning in 2016.

Inventory levels this month are are the high side of normal – but not 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 4.3 % month-over-month.

unadjusted sales year-over-year growth is up 8.8 % year-over-year (it was an upwardly adjusted +13.1 % last month)

unadjusted sales (but inflation adjusted) up 8.2 % year-over-year

the 3 month rolling average of unadjusted sales decelerated 1.1 % month-over-month, and up 9.6 % year-over-year.

unadjusted inventories up 4.9 % year-over-year (decelerated 0.1 % month-over-month), unadjusted inventory-to-sales ratio is 1.26 which is marginally above normal but well below recessionary levels.

US Census Headlines based on seasonally adjusted data:

sales up 0.8 % month-over-month, up 9.2 % year-over-year (it was reported sales up 9.8 % last month which is a deceleration of 0.6 %)

inventories up 1.0 % month-over-month – 5.3 % year-over-year,

inventory-to-sales ratios were 1.30 one year ago – and are now 1.26.

expectations for inventory growth from Econoday was consensus range of 0.7 % to 0.8 % (consensus 0.8%).

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.