July Wholesale Inventories Continue Rising While Sales Fall

Another economic report for another trading day, and it is not looking for good for the state of business in the economy. The U.S. wholesale inventories reading for the month of July came in at +0.7%. Bloomberg was calling for +0.4% and Dow Jones was also calling for +0.4%.

The Commerce Department said that the 0.7% gain translated to a seasonally adjusted $485.19 billion in July. The problem is that sales from wholesalers fell by 0.1% in July down to $402.39 billion. This is yet another gain in the inventories to sales ratio (now 1.21) and that is said to be the worst ratio since November of 2009. This reading measures about one-third of all business inventories.

Bloomberg had noted that the range of economist expectations was flat to as much as +0.8%. It also noted for June, “Wholesale inventories in June dipped 0.2 percent. But wholesale sales fell 1.4 percent.”

With sales having dropped for three consecutive months, the risk here is that businesses are holding too much inventory and may continue to slow down on orders.

JON C. OGG