March 10, 2009

Wholesale stock-to-sales ratio climbs

Merchant wholesale trade sales dropped 2.9 percent in January from December, while inventories declined 0.7 percent, the U.S. Census Bureau said Tuesday.

The sharp contrast in the two figures indicate inventories are out of step with sales on the wholesale level. Sales fell to $326.1 billion and inventories dropped to $424.2 billion by the end of the month, the Census Bureau said.

The difference pushed the stock-to-sales ratio to 1.3, up sharply from the January 2008 ratio of 1.09.

In the automobile industry, sales fell 6.7 percent in the month while inventories dropped 4.8 percent, indicating production will need to slow further to prevent unsold inventories from building.

Durable goods sales overall dropped 6.5 percent during the month while inventories dropped 1.3 percent. Over the year, durable goods sales have declined 17.3 percent while inventories increased 4 percent, the report said.

Sales for non-durable goods on the wholesale level have fallen 13.7 percent in the past year, while inventories have fallen 3.7 percent.