WASHINGTON – The value of wholesale inventories rose 0.4% in May, an upward adjustment from the 0.3% gain estimated in the advance estimate, while wholesale sales fell 0.5%, their largest decline since July, data released Tuesday by the U.S. Commerce Department showed.
Looking ahead to Friday's report, the tracking looks positive for business inventories, but negative for sales. While factory inventories were down 0.1% in May according to data released on July 5, an MNI calculation shows that the addition of the gain for wholesale inventories reported Tuesday and the 0.6% rise in retail inventories in the advance estimate will result in a 0.3% rise in business inventories if there is no revision to the retail data.
The 0.5% decline for wholesale sales reported Tuesday comes on top of a 0.1% increase for factory shipments reported last week and a 0.3% decline for retail trade sales from last month's sales release, adding up to a 0.2% decrease for business sales barring a large revision to retail trade sales.
With the rise in May wholesale inventories and the decline in wholesale sales, the inventory/sales ratio rose to 1.29 in May from 1.28 in April. The ratio was still well below the 1.34 mark in May 2016, as sales have increased much faster than inventories over the last year.
Excluding the auto category, wholesale inventories would have been up only 0.3% in May after a 0.3% decrease in the previous month, an MNI calculation showed. Sales would have still been down 0.5% in May if auto sales were excluded. This followed a 0.4% decline in April.
The value of durable inventories rose 0.6% in the month, as auto inventories rose 0.7%. The remaining durables components were generally higher, but there were declines for the electrical, furniture, and lumber categories.
Nondurables inventories were flat in May. Petroleum inventories rose 2.6%, while the other components were split between gains and losses. The primary decline was for large drugs category, which fell 1.7% in the month.
Durables goods sales were down 0.1% in the month, with auto sales off by 0.5%. The remaining components were mixed, with sales of machinery and professional equipment up, offset by declines for electrical and metals.
Nondurable goods sales were down 0.9% in May after a 1.4% April decrease. Petroleum sales plunged by 7.8% after a 3.3% decrease in April. The other component movements were all higher, except for a 0.5% decline in alcohol sales.
