Washington, DC, November 9, 2006--Inventories at U.S. wholesalers rose to their highest level in relation to sales in more than a year in September, the Commerce Department reported Wednesday.
Sales at wholesalers fell 1.2% in September, the first decline since last December and biggest drop in three years, while inventories increased 0.8%.
The inventory-to-sales ratio rose to 1.18 in September, the highest since August 2005. It was at a record low 1.15 in July and rose to 1.16 in August. The typical wholesaler has about 36 days of sales on hand, up from 35 days in August.
The buildup in inventories, if sustained throughout the pipeline running from production to final sales, could lead to cutbacks in output and employment.
The increase in inventories was slightly higher than the 0.6% predicted by economists.
Inventories had increased an upwardly revised 1.2% in August.
Inventories are up 9.9% in the past year. Sales are up 8.1% in the past year. The figures are not adjusted for price changes.
The wholesale inventory report rarely affects financial markets. It is of interest primarily to economists tweaking their estimates for gross domestic product. The Commerce Department will finalize its estimates for business sales and inventories for September with the release of the retail inventory data next week.
Inventories of durable goods rose 1.5%, including a 1.9% gain in auto inventories. Large increases were also reported in lumber, metals, machinery and computers. Sales of durable goods fell 0.3%, including a 1.3% drop in autos.
The inventory-to-sales ratio rose to 1.53 from 1.50 for durable goods. It's the highest ratio in three years.
Inventories of nondurable goods fell 0.4% in September, led by drugs and farm products. Inventories of petroleum increased 2.4%. Sales of nondurable goods dropped 2% in September, led by 7.1% drop in petroleum.
The inventory-to-sales ratio rose to 0.84 from 0.83 for nondurable goods. It's the highest ratio since March.
