Wholesale sales were up and inventories were down for May, according to a Commerce Department report (link opens as PDF) released today.
After increasing a revised 0.7% in April , wholesale sales increased a seasonally adjusted 1.6% to $425 billion. While durable goods sales increased 0.3% for May, nondurables packed the most punch with a 2.8% gain. Auto sales increased 3% over the month, while metals and minerals dropped off 4.5%. "Apparel, piece goods, and notions" registered a 5.3% gain, and grocery sales recorded a 3.8% improvement.
While sales headed higher, inventories shrank a seasonally adjusted 0.5% to $501 billion, their fastest decline since September 2011. Analysts were pleasantly surprised, having expected a 0.3% gain after April's revised 0.1% decline. Durable goods inventories fell 0.3%, largely due to a 1.7% decline in metals and minerals. Nondurable goods dropped 0.8%, primarily caused by a 6% dive in farm product raw materials inventories.
Looking back over the past 12 months, wholesale sales have increased 4.1%, while inventories are up 3.3%.
To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales increased and inventories fell from April to May, the inventories/sales ratio fell sharply, from 1.21 to 1.18, for the lowest reading since April 2012.