Wholesale inventories fell 0.1% in October
According to the US Census Bureau, wholesale inventories stood at $585.9 billion at the end of October. The metric fell 0.1% following a downwardly revised 0.2% gain in September 2015. The wholesale inventories rose 3.6% from the October 2014 level. The 5.2% decline in stocks of farm products from the last month contributed largely towards the decline in October. Also, the decline was seen in inventories of metals and minerals, computer equipment, and automobiles by 1.1%, 0.7%, and 0.5%, respectively, in October. With the decline in wholesale inventories, companies such as Costco (COST), Walmart (WMT), and Target (TGT) fell 5.4%, 0.81%, and 0.89% as of December 9.
Wholesale trade sales were virtually unchanged in October
For October 2015, wholesale trade sales were $448.0 billion, virtually unchanged in comparison to September. The wholesale trade sales were down 3.7% from a year ago. The SPDR S&P Retail ETF (XRT) has declined 0.45% as of December 9. XRT has lost 4.0% from a year ago.
In October, sales of durable goods fell by 0.8%, whereas an increase of 0.7% was seen in non-durable goods. The sales of motor vehicle and motor vehicle parts and supplies were down 2.6% from September. Sales of petroleum and petroleum products were up 2.9% and sales of paper and paper products were up 1.5% in October.
Auto stocks such as Ford Motor (F), General Motors (GM), and Fiat Chrysler (FCAU) were down 0.57%, 0.08%, and 0.07%, respectively, as of December 9. The October inventories-to-sales ratio stood at 1.3. The ratio was 1.2 in October 2014.
Manufacturers are facing a decline in new orders as reported in the manufacturing report released earlier this month. With new orders drying up, manufacturers are cautious about inventory build-up. Declining inventories may also impact 4Q GDP estimates this year.
With a slowdown in China, major world economies are struggling to instate economic growth. Let’s see how inflationary pressure is trending in China in the next article.