7/13/2015
By Dominique Paul, Research Analyst

The Census Bureau released its monthly wholesale inventories report for May 2015. During the month, inventories rose 0.8% month-over-month to $581.8 billion after rising 0.4% in April. Growth of durable goods was driven by computer and computer peripheral equipment and software industry inventories increasing by 2.25% month-over-month; sales in the industry fell by 1% month-over-month. Advanced Micro Devices (AMD) and Gartner recently commented on the global demand for personal computers decreasing among both consumers and businesses and the Wholesale Inventories report reiterates just how serious the issue is becoming.

As for non-durable goods, the petroleum industry saw the greatest inventories build as it rose 4.4% month-over-month, however, the inventory was matched by sales which increased by 4.3%. The medical sector’s drugs industry had the second largest inventory build, rising 2.7% month over month; sales increased by 0.5%. Overall, sales for the month of May are up 0.3% month-over-month to $449.8 billion from $448.4 billion the prior month. The inventory sales ratio remains unchanged at 1.29. In order for the economy to get out of this rut, we need to see sales growth outpacing inventory growth. That would raise the demand for workers to help produce and manufacture more goods. More jobs equals higher consumer confidence and preferably, more spending.

Dominique Paul
Wall Street Strategies

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