Wednesday, February 11, 2009

Wholesale Inventories Rising Dramatically

In response to my post on Wholesale Sales, GreenAB asks:

Do you have a chart of this data (industry sales ratio)? Vehicle inventories rose 1.7 percent, after increasing 1.5 percent the prior month, while auto sales fell 8.1 percent, today’s report showed. That pushed the industry’s inventory-to-sales ratio up to a record 2.31 months...
You want it? You got it...



Bloomberg further details:
Wholesalers had enough goods on hand to last 1.27 months at the current sales pace, the highest level since 2002. Sliding demand in the U.S. and abroad signals a further pullback in production as companies try to work through their stocks of unsold goods at warehouses, worsening the recession.
More interesting (to me) is the year over year change in the inventory sales ratio.


In other words, even if final consumer demand picks up, wholesalers won't necessarily be buying from producers as they already have the inventory piling up.

Source: Census