U.S. Wholesale Inventories Rise Modestly in February as Sales Strengthen
Inventories trend higher y/y.
Sales surge broadly.
Inventory-to-sales ratio continues to decline.
Wholesale trade inventories increased 0.3% (1.1% y/y) during February after a 0.8% January rise and a 0.7% December decline. The increase matched expectations in the Informa Global Markets Survey and compared to a 0.3% decline in the advance report issued two weeks ago.
Durable goods inventories rose 0.2% in February (0.4% y/y) after rising 0.8% in January. Machinery inventories, the largest sector, fell 0.5% (+1.4% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 0.3% (-1.3% y/y). Furniture inventories eased slightly (+4.1% y/y) while electrical equipment inventories declined 0.4% (-2.9% y/y). Inventories of nondurable goods rose 0.5% (2.3% y/y) following a 0.8% rise. Petroleum inventories increased 2.4% (3.5% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 0.3% (1.3% y/y). Grocery inventories, the second largest category, rose 1.0% (6.6% y/y). Apparel inventories fell 0.3% (-7.0% y/y) and chemical inventories rose 0.7% (0.6% y/y).
Sales at the wholesale level strengthened 2.4% (4.3% y/y) in February after declining 0.9% in January and rising 1.4% in December. A 0.8% February rise had been expected in the Action Economics Forecast Survey.
Durable goods sales rose 3.4% (6.6% y/y) in February after falling 2.4% in January. Sales of electrical equipment & electronic goods, the largest sector, surged 3.6% (19.1% y/y), after a 4.9% decline. Professional and commercial equipment sales, which includes computers, rose 4.9% (9.5% y/y), while vehicle sales improved 2.1% (-0.9% y/y). Sales of machinery surged 5.1% (3.1% y/y). Nondurable product sales strengthened 1.4% (2.2% y/y) after rising 0.4% in January. Petroleum product sales rose 2.8% (-2.1% y/y). Drug store sales, the largest category, increased 1.4% (10.0% y/y), while grocery store sales gained 0.9% (5.3% y/y). Sales of apparel weakened 1.2% (+5.0% y/y) while paper sales rose 3.4% (2.6% y/y).
The inventory-to-sales (I/S) ratio at the wholesale level declined to 1.30 in February and has been moving lower for the last two years.
The wholesale I/S ratio for durable goods fell to 1.69 and also has been trending lower. The machinery ratio fell to 2.94 while motor vehicles eased to 1.73. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.04 early in 2023. The petroleum industry I/S ratio held steady at 0.31, and the drug industry ratio eased to 0.95. Apparel's I/S ratio of 2.06 remained below its 2.32 level one year earlier and has been declining since early 2023.
