Wholesale Trade Sales & InventoriesOctober 2010

Wholesale Trade Sales & Inventories are out and the press is all a gaga. Wholesale sales increased 2.2% and inventories were up 1.9% for the month.

Part of the reason the press is going nuts is simply because this report beat forecasts. Another reason is these numbers are not adjusted for price increases, i.e. inflation. Case in point is petroleum products, up 6.4%. We all know the price of oil has been increasing. I find it strange the focus is on whether an economic report beat expectations instead of the macroeconomic implications.

That said, inventories contributed extensively to GDP growth, as do sales. An inventory build-up also implies someone out there believes demand will increase for their wares.

For sales, non-durable sales were up 3.7% from last month. That said, farm products sales were 25.9% higher than last month. This is the reason for the bump up in wholesale sales, farm products.

Sales are up 13.4% for the year but it is once again farm products with the blow out, up 54.7% for the year.

In Durable wholesale sales, lumber was up 2.7% for the month and machinery, up 3.1% for the month. The best yearly showing in durable wholesale sales is metals, up 31.8% for the year but this month down -1.3%.

On inventories, again it was farm products in non-durable wholesale, up 20.5% for the month.

The good news is the sales to inventory ratio, 1.18, so sales are keeping up with inventory build up.

Must have been one hell of a harvest this year. (This report is seasonally adjusted).

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