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Wholesale Sales Drop: U.S. Economic Forecast Revised Lower Lombardi Letter 2017-09-07 02:09:49 U.S. economy U.S economy outlook U.S economy outlook 2017 Sales at merchant wholesalers in the U.S. economy dropped in July. Here’s what investors need to know. News

Wholesale Sales Drop: U.S. Economic Forecast Revised Lower

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19th Consecutive Decline In Wholesale Sales In U.S. Economy

On September 9, the U.S. Census Bureau reported the sales and inventory statistics for merchant wholesalers in the U.S. economy for July. Overall, the decline in July’s sales at merchant wholesalers was the biggest monthly decline since January, and these sales have been declining for 19 consecutive month. The sales of merchant wholesalers, after adjusted for seasonal variations, were registered at $441.9 billion in July 2016. This was down 0.4% from June 2016, and down one percent from July 2015.

Breaking down the sales figures further, in July, sales of durable goods increased by 0.2% from the previous month, and increased 0.7% year-over-year. Sales of non-durable goods were down 1.0% month-over-month, and down 2.6% year-over-year. Also, sales of petroleum and petroleum products declined 3.5% from June. Sales of beer, wine, and distilled alcoholic beverages decline 2.4%.


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Total inventories of merchant wholesalers, adjusted for seasonal variations, were $591.3 billion at the end of July. This was unchanged from June, and up 0.5% from July 2015. (Source: “Monthly Wholesale Trade: Sales And Inventories July 2016,” U.S. Census Bureau, September 9, 2016.)

Breaking down the figures further, in July, inventories of durable goods increased 0.3% month-over-month, but were down 1.8% when compared to the same period a year ago.  Inventories of non-durable goods were down 0.3% from June, but they edged higher by 4.3% percent year-over-year.

The July 2016 inventories/sales ratio for merchant wholesalers stood at 1.34. In July 2016, this ratio was 1.32. The inventories/sales ratio essentially shows how many months of sales it takes to clear inventories. The inventories/sales ratio is considered a great indicator for economists. As businesses increase inventories, it could mean they are not selling as much. Also, it could be considered a drag on economic growth.

Over the past few years, the inventories/sales ratio has been increasing. Earlier in 2016, this ratio was registered at 1.37. This was the highest since 2009, when the U.S. economy was in midst of a recession.

After the release of the data, the Federal Reserve Bank of Atlanta lowered its estimated growth rate for the U.S. economy. Through its “GDPNow” forecasting model, the Atlanta Fed expects the U.S. economy to grow at an annual pace of 3.3% in the third quarter. On September 2, the U.S. economy was forecasted to grow by 3.5%. (Source: “GDPNOW,” Federal Reserve Bank of Atlanta, last accessed September 9, 2016.)

The monthly wholesale trade figures for the month of August will be released on October 7, 2016 at 10:00 a.m. EDT.

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