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Important releases hone in on rates and consumer spending

Part 10
Important releases hone in on rates and consumer spending (Part 10 of 10)

Why durable goods trends affect key wholesale trade releases

U.S. Census Bureau: Wholesale trade and inventories report for May

The U.S. Census Bureau will release wholesale trade data for May on Thursday, June 10.

The Monthly Wholesale Trade Survey, or MWTS, gives you nationwide estimates of monthly sales, end-of-month inventories, and inventories-to-sales ratios by businesses for wholesale firms. Specifically, the MWTS includes the dollar value of sales made and inventories held by wholesale merchants who sell goods on their own account. The figure also includes wholesale merchants or jobbers, industrial distributors, exporters, and importers.

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Highlights from last month’s report: Monthly sales of merchant wholesalers

  • Sales by merchant wholesalers increased 1.3% in April month-over-month. They came in at $450.2 billion on a seasonally adjusted basis. The report also revised March’s sales estimate upward by ~$0.9 billion.
  • We saw a spike in durable goods. They were up 1.7% month-over-month and 6% year-over-year. Durable goods were a major driver of the increase in April. Motor vehicle sales, and motor vehicle parts and supplies sales were up 2.9% month-over-month. And sales of professional and commercial equipment and supplies were up 2.4% month-on-month. These were key sales components, driving the increase.
  • Sales of non-durable goods were up 1% and 9.4% month-over-month and year-over-year, respectively.
  • Inventories for almost all product groups increased in April. Total wholesale inventories increased 1.1% to $530.6 billion over March. This represented a 6.7% annual increase.
  • The inventories-to-sales ratio was unchanged from March’s level, at 1.18. The lower ratio meant of strong sales in the automobile (CARZ), furniture, and lumber and computer equipment industries.

These are key sectors for the economy. They represent discretionary consumption, housing (XHB), and corporate investments. They’re likely to spur GDP growth in the future.

Outlook for May’s release

Due to the steady performance of the manufacturing (VIS) sector this year, wholesale trade data is likely to be positive. Also, most economists expect an uptick in economic activity in the second half of the year. This should boost the report.

Investor outlook

As this indicator is released with a one-month lag, it’s likely to have limited impact on the debt (BOND) and equity markets (DIA).

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