November 2020 Headline Wholesale Sales Improved And Inventories Unchanged

The headlines say wholesale sales were up month-over-month with inventory levels remaining elevated. Our analysis shows improvement in the rate of growth for the rolling averages.

Analyst Opinion of this month's Wholesale Sales

Our view is that this data set is better than last month.

Year-over-year employment changes and sales growth reasonably correlated until the coronavirus hit.

This data set is considered an outlier and may have issues with data gathering, changing dynamics of the wholesale industry, or definition issues with what is considered wholesale.

Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

  • the unadjusted sales rate of growth accelerated by 1.7 % month-over-month.
  • unadjusted sales year-over-year growth is down 0.3 % year-over-year (it was down 2.0 % YoY last month)
  • unadjusted sales (but inflation-adjusted) down 2.3 % year-over-year
  • the 3 month rolling average of unadjusted sales accelerated by 1.8 % month-over-month, and down 0.4 % year-over-year.

  • unadjusted inventories down 1.7 % year-over-year (accelerated 0.3 % month-over-month), the unadjusted inventory-to-sales ratio is 1.26 which is high but not recessionary.

US Census Headlines based on seasonally adjusted data:

  • sales up 0.2 % month-over-month,down 0.2 % year-over-year (it was reported sales +0.9 % last month YoY)
  • inventories unchanged month-over-month - down 2.1 % year-over-year,
  • inventory-to-sales ratios were 1.33 one year ago - and are now 1.31
  • expectations for inventory growth from Econoday was 0.1 % to 1.0 % (consensus +0.2 %).

Wholesale sales were at record highs for almost two years - until 2015 where they contracted year-over-year - this contraction ended in 2017 but returned in 2019. Now we have the coronavirus impact.

Seasonally Adjusted Inventory-to-Sales Ratio

The year-over-year change in the inventory-to-sales ratio is what is important. A jump in the ratio could indicate a slowing economy (one month of data is not a trend). A flat trend would indicate an economy that was neither accelerating nor decelerating. A decelerating trend would indicate an improving economy.

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