According to data from the Commerce Department, U.S. wholesale inventories experienced a larger decline in June than anticipated, indicating that merchants are liquidating stock due to weakening demand.
Decrease in Merchant Wholesalers’ Inventories
In June, inventories of U.S. merchant wholesalers dropped by 0.5% compared to the previous month. Revised figures from the Commerce Department also revealed that the stock of unsold goods decreased in May compared to April.
Economist Expectations
Economists surveyed by The Wall Street Journal had predicted a 0.3% decline in wholesale inventories for June. It’s important to note that these figures are not adjusted for inflation.
Nondurable Goods Take the Lead
The decrease in overall inventories was mainly driven by a 1.2% drop in inventories of nondurable goods. Notably, petroleum, paper, and farm products saw significant declines.
Durable Goods Slip
Durable goods inventories slipped by 0.1% on a monthly basis. This decline was primarily fueled by falling stocks of metals, hardware, and computer equipment. However, inventories of automotive and machinery experienced an increase.
Comparison with Last Year’s Data
According to the Commerce Department’s data, total inventories in June were up 1.3% compared to the same month last year.
Inventory-to-Sales Ratio
The ratio of inventories to sales, which indicates how many months’ worth of stock wholesalers currently have based on current sales rates, was 1.41 in June. This figure is slightly higher than the revised ratio of 1.40 in May.