Wholesale Sales Up 0.6% as Inventories Expand

Wholesale trade expanded for August, according to a Commerce Department report (link opens a pdf) released today.

After revised numbers put July sales flat from June, wholesales sales bumped up a seasonally adjusted 0.6% to $428.4 billion. 

While wholesale trade is used as an indicator of economic strength, investors pay particular attention to durable goods as a potential sign of more sustainable confidence (or lack of confidence). For August, durable goods sales increased an even larger 0.9% month over month, pushed ahead primarily by 3.1% sales growth in computer equipment and 2.7% growth in machinery. 

Nondurable goods sales increased 0.3% due primarily to a 3.3% sales boost in chemicals, as well as a 1.2% increase in medical drugs. 

Investors also keep a close eye on any inventories buildups. Rising inventories point to stronger growth because it means factories have produced more goods. For August, overall inventories increased 0.5%, slightly more than analysts' 0.4% growth expectations and the most since January. 

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since August's sales growth essentially equaled out with its inventories increase, the inventories/sales ratio remained at 1.17. 

Source: Census.gov. 

-- Material from The Associated Press was used in this report.

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