Wholesale sales were up and inventories down for February, according to a Commerce Department report (link opens in PDF) released today. After January's sales slump and rise in inventories, this newest report indicates wholesalers are back on a more sustainable business path.
Sales for February increased 1.7% (from January) to a seasonally adjusted $422.5 billion, boosted significantly by a 10.6% spike in petroleum and petroleum products sales. Compared to February 2012, lumber sales have improved the most (+17.6%), while metals sales take the underperformance cake (-4.4%). Year-over-year U.S. total sales increased 3.7% in February
February's inventories shrank 0.3% to $501.4 billion. Even after January's revised 0.8% rise, market analysts were expecting an additional 0.5% bump. A 0.9% drop in nondurable goods pushed inventories lower, led by a 5.7% drop in farm products. Despite the overall drop in inventories, computer equipment notched a 2.2% increase for February.
To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales rose and inventories fell from January to February, the inventories/sales ratio dropped from 1.21 to 1.19, just 0.01 above February 2012's ratio.