January 2016 Wholesale Sales Weakness Grows

The headlines say wholesale sales were down month-over-month with inventory levels remaining at levels associated with recessions. Our analysis shows a declining trend of the 3 month averages. The best way to look at this series may be the unadjusted data three month rolling averages.

Note that Econintersect analysis is based on the change from one year ago.Econintersect Analysis:

unadjusted sales rate of growth decelerated 2.3 % month-over-month.

unadjusted sales year-over-year growth is down 6.4 % year-over-year

unadjusted sales (but inflation adjusted) down 6.2 % year-over-year

the 3 month rolling average of unadjusted sales decelerated 0.2 % month-over-month, and down 4.2 % year-over-year. There has been a general deceleration trend since late 2014.

Year-over-Year Sales – Unadjusted (blue line), Unadjusted but Inflation Adjusted (red line), 3 month Rolling Averages (yellow line)

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unadjusted inventories up 2.0 % year-over-year (deceleration of 0.1 % month-over-month), inventory-to-sales ratio is 1.51 which is historically is at recessionary levels.

US Census Headlines based on seasonally adjusted data:

sales down 1.3 % month-over-month, down 3.1 % (last month was reported down 4.5 %) year-over-year

inventories up 0.3 % month-over-month, inventory-to-sales ratios were 1.28 one year ago – and are now 1.35.

the market (from Bloomberg) expected inventory month-over-month change between -0.4 % to 0.3 % (consensus -0.1 %) versus the +0.3 % reported.

Wholesale Sales – Unadjusted – $ Millions

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Wholesale sales were at record highs for almost two years – until 2015 where they contracted year-over-year (and the contraction continues). Overall, the inventory-to-sales ratios (a rising ratio is an indicator of economic slowing) was abnormally high relative to past Novembers.

Unadjusted Inventory-to-Sales Ratio (blue line – left axis), Year-over-Year Change (red line – right axis)