September 15th, 2021
Wholesale inventories grew as anticipated, while consumer credit rose but not as much as expected. Meanwhile, layoffs declined considerably.
Wholesale inventories rose to $722.4 billion at the end of July, which marked a 0.6 percent gain over June, the Census Bureau reported last week. This was in line with the 0.6 percent growth economists had expected for the month, and when compared to the same period a year ago, July\’s inventories were 11.5 percent over July 2020.
Wholesale inventories are an important indicator to monitor because they indicate wholesalers\’ anticipation of increased demand from the retail sector. That, in turn, is important because consumer spending drives roughly 70 percent of all U.S. economic activity.
Some key categories that helped drive April\’s inventory expansion included metals, which grew 4.7 percent for the month; lumber, which was up 2.4 percent; furniture, which expanded 2.1 percent; alcohol, which rose 1.6 percent; and hardware, which increased 1.5 percent.
Meanwhile, wholesale sales increased to $601.3 billion in July, which was 2 percent over June. Compared to the same period last year, July\’s wholesale sales were up 23.7 percent over July 2020\’s sales.
April\’s inventory-to-sales ratio narrowed slightly to 1.20 from June\’s 1.22. A shrinking ratio can mean increased demand for wholesale goods or reduced inventories of high-value goods.
Consumers continued to borrow in July, but did so in more measured amounts than previous months.
Total consumer borrowing rose to $4.331 trillion during July, which was 0.39 percent over June\’s total outstanding of $4.314 trillion, the Federal Reserve reported last week. July\’s $17 billion increase was well below the $26 billion gain analysts had expected for the month.
Non-revolving debt, such as student and car loans, increased to $3.332 trillion in July from June\’s figure of $3.321 trillion. Revolving debt, which is mainly credit card spending, climbed to $998.4 billion in July, from July\’s total of $992.8 billion.
Notably, Fortune magazine reported last week that the average credit score grew to 695 this year, up from 688 in 2020 and 682 in 2019. This marked a 13-year high, and was likely due to consumers using COVID relief funds to help pay down debt.
Initial Jobless Claims
In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending September 4th declined to 310,000, a drop of 35,000 claims from the previous week\’s revised total of 345,000, the Employment and Training Administration reported last week.
This was lower than economists\’ expectations of initial jobless claims of 335,000. It\’s important to note that economists consider an initial claims level under the 300,000 mark as a sign of a growing job market.
The four-week moving average, which is considered a more stable measure of jobless claims, dropped to 339,500, which was 16,750 claims below the preceding week\’s average of 356,250 claims.
This week, we can expect:
Monday – Federal budget for August from the Treasury Department.
Tuesday – Consumer credit for July from the Federal Reserve.
Wednesday – Import prices for August from the Bureau of Labor Statistics; industrial production and capacity utilization for August from the Federal Reserve.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; retail sales and business inventories for August from the Census Bureau.
Friday – Consumer sentiment for September from the University of Michigan’s Surveys of Consumers.
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