Inventory Growth Well Below Sales At The Wholesale Level

Wholesalers held back inventory growth in May, up only 0.1 percent and well under a 0.5 percent rise in sales at the wholesale level. The stock-to-sales ratio is down one notch to 1.35 from 1.36.

Inventories of two very large components -- drugs and autos -- fell sharply, making for leaner inventories relative to sales for both. In contrast, wholesale inventories of farm products have been on a sharp climb at the same time that sales have been falling, an unfavorable mix that is lifting the stock-to-sales ratio sharply, to 1.56 vs 1.46 in April and 1.30 in March.

But in general, inventories have been held successfully in check in line against no more than moderate rates of sales growth. Business inventories will be released Friday and will combine this report together with factory inventories, which slipped 0.1 percent in May, and yet-to-be released data on retail inventories.

Recent History Of This Indicator:
Wholesale inventories rose a sharp 0.6 percent in April but wholesale sales also rose sharply, up 1.0 percent which made for a leaner inventory-to-sales ratio of 1.35. Forecasters see wholesale inventories rising a modest 0.2 percent in May. Note that this report is an input into the business inventories report which will be released Friday, July 15.