Inventories are up 7.7 percent from a year ago. Sales are up 2.7 percent.
The Monthly Wholesale Trade report for January shows inventories rose 1.2% in January following a revised 1.1% in December.
Sales
January 2019 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading day differences but not for price changes, were $499.8 billion, up 0.5 percent from the revised December level and were up 2.7 percent from the January 2018 level. The November 2018 to December 2018 percent change was revised from the preliminary estimate of down 1.0 percent to down 0.9 percent.
Inventories
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $669.9 billion at the end of January, up 1.2 percent from the revised December level. Total inventories were up 7.7 percent from the revised January 2018 level.
Inventories/Sales Ratio
The January inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.34. The January 2018 ratio was 1.28.
Econoday Consensus
The Econonoday consensus estimate was for a 0.1% rise in inventories in a range of -0.1% to +0.1%.
There are few indications of economic slowing that are more convincing than an unwanted build in inventories -- and that apparently is what's underway in the wholesale sector. Wholesale inventories jumped 1.2 percent in January to far exceed anyone's expectations and are up 7.7 percent year-on-year. Confirmation that this is unwanted comes from sales in the sector which did rise 0.5 percent in January but follow a long stretch of contraction. Year-on-year, sales are up only 2.7 percent. The sector's stock-to-sales ratio continues to climb, at 1.34 vs 1.33 in December and against 1.28 in January last year. Today's data confirm the wisdom of the Federal Reserve's cautious outlook.
Oops!
Total Business Inventory-to-Sales
The Census department did not update total inventory-to-sales numbers today. Thus the above chart is stale.
Compared to years prior to 2000, these numbers don't indicate a huge problem. Compared to years between 2005 and 2015, the numbers do seem to be a problem.
Bond Market Panic
I strongly sense a huge build in inventories to total sales.
That is the message from the near panic in the bond market today where yields inverted nearly across the board.
For discussion, please see Near Full Inversion: 10-Year Note Inverts With 1-Month T-Bill.
This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.
Recommended Content
Editors’ Picks
AUD/USD bulls run into a wall of resistance, bears eye downside breakout

The Australian dollar fell below 0.65 the figure and is hovering around the worst levels in over six months growing expectations that the US Federal Reserve would raise interest rates further. The Aussie was also weighed by poor China data.
EUR/USD approaches 1.0700 as USD Index sees more downside ahead of US Employment

The EUR/USD pair is marching towards the round-level resistance of 1.0700 in the early Tokyo session. The major currency pair showed a sharp recovery from 1.0640 on Wednesday after the US Dollar Index (DXY) faced intense selling pressure post refreshing a 10-week high at 104.70.
Gold reclaims $1960 on US debt ceiling hopes, falling US bond yields

Gold price advances during the day but remains set to achieve monthly losses of more than 1.30% in May, portraying modest gains, and is trading back above the $1960 area.
Solana price back above $20 as SOL sees a spike in active users

Solana price is back above the $20 range after a bounce from the $18.87 support on May 25. The newly found momentum comes as the number of active users continues to increase. SOL could rise 30% to the $26.30 range high as cryptos attempt a recovery rally this week.
C3.ai Stock News: After 33% rally, AI shares backtrack ahead of earnings

C3.ai (AI) stock slipped 7.6% to $41.62 in Wednesday’s premarket ahead of quarterly earnings expected after the close. This may just be traders taking profits after Tuesday’s 33.4% surge in the AI stock price.