Wholesalers continued to burn through inventory in August despite sharp improvement in sales. Wholesale inventories, extending a long string of deep declines, fell 1.3 percent with the year-on-year rate deepening to minus 14.7 percent. Nearly every component posted a decline in the month including autos which were drawn down by cash for clunkers. But sales at the wholesale level, especially for autos, were very strong, up a total 1.0 percent on top of a 0.6 percent rise in July and a 0.3 percent rise in June. Interestingly, the year-on-year rate of decline for sales in August, at minus 17.7 percent, was still deeper than the inventory rate of decline, perhaps hinting that wholesalers still have more inventory drawing to do. Note that wholesalers in last week's ISM non-manufacturing report for September reported another draw.
Business inventory data, to be released Wednesday, will include August data from the retail sector. Factory inventories for August have already been released with the durable goods report, showing a 0.8 percent decline. Though not evident in any of these reports, last week's ISM report on the manufacturing side, a sector that entered the recession first and was the first to show recovery, showed a significant slowing in destocking during September, perhaps pointing ahead to the long awaited restocking cycle.