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June Wholesale Trade Could Impact GDP Revision

The reading for wholesale trade in June came out with some mixed fanfare on Tuesday. While this may be a June reading and not important to many economists or investors looking for real-time data for August, it will play into gross domestic product (GDP) revisions in the second quarter.

Inventories rose by 0.9% to $586.2 billion at the end of June. That is higher than the Bloomberg consensus estimate of 0.4% for that month. The prior report, from May, was revised to a small gain of only 0.6%, versus the preliminary report showing a gain of 0.8%. Ahead of the data’s release, Bloomberg had noted that inventories in the wholesale sector had look bloated earlier in the year but had since stabilized.

The Census Bureau showed that June 2015 sales of merchant wholesalers were up by only 0.1% to $449.9 billion, versus the revised May level. Unfortunately, that reading is down by 3.8% from the June 2014 level. May’s preliminary sales estimate was revised downward by $0.5 billion, or down by 0.1%.

The Census data showed more sales data as follows:

  • June sales of durable goods were down 1.1% from last month and down 1.5% from a year ago.
  • Sales of motor vehicle and motor vehicle parts and supplies were down 2.8% from the prior month.
  • Sales of machinery, equipment and supplies were down by 2.2%.
  • Sales of nondurable goods were up 1.2% from May, but down by some 5.7% from last June.
  • Sales of petroleum and petroleum products were up 3.7%.
  • Sales of farm product raw materials were up 3.6%.

The final view is the inventories/sales ratio, and this seasonally adjusted data from June was 1.30, versus the June 2014 ratio of 1.19. That ratio in May was originally reported as 1.29.

Again, this wholesale trade data from the Census plays more into revisions on GDP than it does on market-moving release data.

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By Jon C. Ogg