Wholesale Inventories Rise Sharply

Wholesale inventories climbed a sharp 0.6 percent in May in a build that is nevertheless far short of sales at the wholesale sector, up an oversized 2.5 percent in the month. The mismatch pulls the stock-to-sales ratio down very sharply, to an overly lean 1.24 from 1.27 in April and 1.29 in March.

The gain in sales is surprisingly broad based: autos up 2.9 percent like the headline, computers up 4.3 percent, electrical goods up 2.2 percent, machinery up 1.3 percent, metals up 1.2 percent, and nondurable goods up 3.1 percent.

Year-on-year rates show how far inventories, at a 5.9 percent gain, are behind sales which are up 11.8 percent. This report is very positive with the inventory build a plus for second-quarter GDP and the need to restock inventories given the enormous strength in sales a plus for production and employment outlooks.