March 2016 Wholesale Sales Strongly Improve

The headlines say wholesale sales were up month-over-month with inventory levels remaining at levels associated with recessions. Our analysis shows an improving trend of the 3 month averages AND inflation adjusted data is now positive.

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

unadjusted sales rate of growth unchanged month-over-month.

unadjusted sales year-over-year growth is up 0.8 % year-over-year

unadjusted sales (but inflation adjusted) up 2.0 % year-over-year

the 3 month rolling average of unadjusted sales accelerated 1.7 % month-over-month, and down 1,7 % year-over-year.

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 unchanged year-over-year (unchanged month-over-month), inventory-to-sales ratio is 1.28 which is historically is at recessionary levels.

US Census Headlines based on seasonally adjusted data:

sales up 0.7 % month-over-month, down 0.2 % (last month was reported down 3.1 %) year-over-year

inventories up 0.1 % month-over-month, inventory-to-sales ratios were 1.32 one year ago – and are now 1.36.

the market (from Bloomberg) expected inventory month-over-month change between 0.0 % to 0.5 % (consensus +0.3 %) versus the 0.7 % 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 high relative to past Februarys.

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

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Year-over-year change in the inventory-to-sales ratio is what is important. A jump in the ratio which could indicate a slowing economy (one month of data is not a trend). A flat trend would indicate an economy which was neither accelerating or decelerating. A decelerating trend would indicate an improving economy. Since mid-2014 there has been a general deterioration of the inventory-to-sales ratio indicating a slowing economy.