Inventories of merchant wholesalers declined 1.6 percent in March, rounding out the first quarter numbers. This report substantiates the inventory decline of over $100B reported in the advance first quarter GDP release. Sales fully gave up last month's small gains, down 2.4 percent, shown in another uptick in inventories/sales ratios.

Inventories Declined More than Consensus Expectations

• Wholesalers rounded out the first quarter with another large decline in inventories and contracting sales. Petroleum inventories have held positive territory on price gains.

• It is clear that the business cycle is hurting service providers as well. Professional equipment sales are plunging and the sector's wholesalers aim to reduce inventories after their unintended build early on.

Drop in Sales Shows Weakness Remains

• Sales declined at a faster pace than inventories, reversing signs of progress in inventories/sales ratios in most sectors.

• Last week's first quarter GDP release showed that inventories pulled the headline down nearly three percentage points. Today's data confirmed that wholesale merchants were a major contributor to this decline along with retailers and manufacturers-the remaining data will be available next week.