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.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD hovers around one-month low amid cautious markets

EUR/USD has been edging lower toward 1.2050, consolidating Friday's losses as the market mood is mixed. Upbeat Chinese GDP and US stimulus are cheering markets while Italy's political crisis and the depressing coronavirus picture is weighing on sentiment. 

EUR/USD News

GBP/USD fails to recover despite accelerated UK vaccine campaign

GBP/USD remains below 1.36, shrugging off the expansion of Britain's vaccination campaign. Post-Brexit talks on financial services continue while tension is mounting ahead of US President-elect Biden's inauguration. 

GBP/USD News

Gold struggles to capitalize on intraday bounce, up little around $1930-32

Gold struggled to capitalize on its goodish intraday bounce of nearly $40 and was last seen trading with modest gains, around the $1830-32 region.

Gold news

Forex Today: Dollar holds onto gains, shrugging off upbeat Chinese GDP, vaccine news eyed

Markets are mixed on "Blue Monday" with the dollar clinging to gains related to risk aversion, while upbeat Chinese growth partially offsets the gloom.Tension is mounting ahead of President-elect Biden's inauguration.

Read more

US Dollar Index: Immediately to the upside comes 91.00

DXY extends the march north and already trades at shouting distance from the 91.00 barrier, or new 2021 highs.

US Dollar Index News

Forex Majors

Cryptocurrencies

Signatures