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Wednesday, June 9, 2010

Wholesales Sales and Inventories Grow

The AP reports:

Inventories held by wholesalers rose for a fourth straight month in April while sales rose for a 13th consecutive time. Both gains were encouraging signs that point to a sustained economic recovery.

Wholesale inventories increased 0.4 percent last month after a 0.7 percent gain in March, the Commerce Department said Wednesday.

Sales increased 0.7 percent in April, helped by higher demand for autos, lumber, computers and electrical equipment. The rise followed a 2.4 percent surge in March.

The hope is that a sustained rise in demand will prompt businesses to step up orders and restock depleted shelves. That would give a boost to factories and prompt them to increase hiring.
As EconomPic has detailed, these figures are all in nominal terms (see here). As a result, some of April's figures look "juiced"... most notably lumber which jumped another ~10% in price during the month. More broadly, commodity prices jumped 1.94% in April (per the DJ UBS Commodity Index) hence the reason for some of the strong figures. The strength in electrical, hardware, and computer equipment is a good sign however, but is offset somewhat by machinery.



Going forward, get ready for some poor interpretation when May's figures are released next month... commodities dropped 6.9% during the most recent month, thus expect a poor headline number in nominal terms.

Source: Census