Tuesday, July 11, 2006

Wholesale inventories rise... or did they decline?

(The funnies will be posted soon, I am running a bit behind for Wednesday but they should be up today later).

In my Weekly Preview I had predicted that wholesale inventories would rise about 0.6% (less than the previous 0.9%) when reported this week. When the report came out the inventory numbers were up 0.8%. I was a bit surprised so I dug into the numbers.

It turns out the unexpected occurance appears to be largely due to seasonal adjustment. When you look into the numbers in terms of the number of months of product the wholesalers are holding the number was 1.16 months in April, 1.2 months in May, and the June number works out to 1.15 months. So the inventories have decreased in terms of the amount of time the supply will feed because inventories are up 0.8% while sales are up 1.6%.

That looks like a surprisingly strong indicator for the economy and I thought it was a neat little bit of math so I thought I would post it.

Invest well, FW.
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