Wholesale Inventories Rise, Sales Fall

Wholesale inventories shot 0.8 percent higher in April which will be a plus for second-quarter GDP yet may raise questions of near-term overhang. Sales at the wholesale level, in contrast to inventories, fell 0.4 percent to drive the stock-to-sales ratio up one notch to 1.34. This ratio in April last year was significantly leaner at 1.28. Year-on-year change in inventories and sales also hints at an imbalance, up 7.6 percent for the former but up only 2.7 for the latter. Sudden economic slowing, as suggested by this morning's employment report, may be pointing to another heavy wholesale build in May as well.