Previous : -58.2 Billion
Forecast : -60.0 Billion

Definition : The Monthly Wholesale Trade Report is based on a monthly survey of about 4,500 wholesale merchants operating in the United States. The sample group is updated quarterly to reflect new businesses in the marketplace, and includes importers and exporters.

Data is released and compiled by the US Census Bureau, about six weeks after the end of the month and the report will show any revisions for the previous two reports as well. Percentage changes are shown from the previous month and year to smooth out volatility. Figures are based on current dollar values for products when estimating sales and inventory levels, which is different from other indicators that may report product based on volume.

The report presents three statistics to investors; monthly sales, monthly inventories and the inventory to sales ratio. The data is broken down into durables and non-durables, and from there about 8-10 industries within both.

Why is it useful?The inventories-to-sales (I/S) ratio is probably the most-watched variable after the Durable Goods Report has come out for the month to shed some light on the durable sales figures. As the inventories-to-sales ratio does a good job of indicating any supply/demand imbalances that exist in the economy.

For example, if retail demand is higher than current production levels, the ratio will show this by falling (in this scenario, a ratio of 1 means that current inventory levels can meet one month of current demand).

The lower the inventories-to-sales ration means demand is outpacing supply and that means two main things, one is that industries have to produce more and that means higher wheel of production as and indication of spending with means strong economic expansion, the second thing is inflation which is a classic scenario for prices to rise as demand is stronger than current supply which means on the consumers it going to rise, on producers it is as well going to rise as they race for raw materials which will drive prices higher, and finally higher capacity utilization means higher inflation.

Nevertheless, the index as a whole is not that much of a market mover to currencies or stocks. And as we mentioned the most looked at aspect is the inventories-to-sales ratio, it is labeled as a lagging indicator by the Conference Board and most economists and for that still means low surprise effect on markets.