Highlights
Warning signals are coming from the wholesale trade report where sales plunged in June and inventories relative to sales show their highest level since early in the recovery. Wholesale sales fell 1.4 percent in June against only a 0.2 percent decline for inventories, a mismatch that puts the inventory-to-sales ratio for the sector at 1.20 which is well up from 1.18 in May and is the highest reading since December 2009. The build in wholesale inventories is centered in durable components including hardware, machinery, and computers. These are components where sales fell sharply in June.

When including three months of factory data and two months of retail data, the picture for total inventories during the second quarter points to a slowing build which is a negative for GDP. Relative to sales, the slowing rate of inventory accumulation isn't slow enough and suggests that businesses may be getting behind the curve and are keeping too much inventory on hand. The second-quarter picture will fill out with Tuesday's release of the business inventories report that will include the still missing retail component.

Market Consensus before announcement
Wholesale inventories rose 0.3 percent in May, a moderate gain but one that compared negatively with a 0.8 percent decline in wholesale sales which was the first decline since May last year. The mix made for the first rise this year in the wholesale stock-to-sales ratio, up to 1.18 versus April's 1.17. But the decline in sales was centered in non-durable goods including petroleum, where prices have been moderating very quickly, and also drugs where a heavy brand-to-generic shift is trimming dollar totals.

2012 Release Schedule

Released On: 1/10 2/9 3/9 4/10 5/9 6/8 7/11 8/9 9/12 10/10 11/9 12/11 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct