U.S. Wholesale Inventories Unexpectedly Rise in September

The U.S. Census Bureau shared its latest wholesale trade statistics for September 2023 on Nov. 8, showing an unexpected rise in inventories both month-to-month and year-over-year.

Inventories at merchant wholesalers were up 0.2% at the end of September compared to a month earlier and up 1.2% year-over-year. It was the first monthly gain since February and topped economists’ estimate that inventories would go unchanged — matching the Bureau’s advance estimate issued on Oct. 26.

MDM Analysis

Industry sentiment in the 3Q23 Baird-MDM Distribution Survey — conducted in early October — indicated that inventory reduction is a key priority for much of the wholesale landscape going into to 2023, making the Bureau’s September inventory data a surprise. The next several months will tell us if it was a one-month aberration or an unexpected trend.

Bureau data showed that the September uptick came as durable goods inventories ticked up 0.2% month-to-month, with machinery (+1.5%), automotive goods (+0.8%) and lumber (+1.1%) all increasing. They were partially offset by lower stocks of electrical (-0.5%), hardware (-1.2%), metals (-0.9%), furniture -1.7%), professional equipment (-0.4%) and miscellaneous (-0.4%).

Meanwhile, nondurable goods inventories gained 0.1%, with stocks of higher petroleum (+4.6%), groceries (+1.2%) and drugs (+0.3%) partially offset by lower levels of apparel (-2.4%), paper (-2.3%), farm products (-2.0%), chemicals (-1.2%), alcohol (-0.3%) and miscellaneous (-0.3%).

Sales

The Bureau reported that 2023 sales of merchant wholesalers were $678 billion, up 2.2% from the revised August level and up 0.9% year-over-year. The July to August percent change was revised up from the advance 1.8% estimate to 2.0%.

Inventory-to-Sales Ratio

The September inventory-to-sales ratio for merchant wholesalers, based on seasonally-adjusted datea, was 1.33, down from the 1.36 seen in August and in September 2022.