Auto Inventories Surge: How’s That Going to Work?

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Published : May 09th, 2017
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Category : Opinions and Analysis

Wholesale inventories in March rose 0.2% as expected by the Econoday consensus. February was revised from 0.4% to 0.3 which will take a tick off GDP first-quarter revisions.

Wholesale inventories came in at a consensus 0.2 percent increase led by a sharp build in autos, excluding which March inventories were unchanged. Sales in the wholesale sector were unchanged in the month though the mismatch with the inventory build does not lift the stock-to-sales ratio which holds at a healthy 1.28. These results will not upset expectations for an incremental 0.1 percent rise in Friday’s business inventories report. Inventories have been moving higher gradually, largely in line with underlying demand.

Auto Inventories Rise as Sales Slump

Inventories vs Sales

The above chart from the Census report Monthly Wholesale Trade: Sales and Inventories March 2017.

The idea that inventories are healthy given poor retail sales reports is more than a bit questionable. A disaster awaits autos.

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  2. May 1: Three Big Red Flags for Auto Sales
  3. May 2: Auto Sales Puke Again: Year-Over-Year Totals: GM -6%, Ford -7.2%, Toyota -4.4%, Fiat-Chrysler -7.0%

Mike “Mish” Shedlock

Source : mishtalk.com
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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