American wholesale firms bought more goods than expected and sales surged the most in almost two years as retailers hope for a sustained pick up in consumption.
Wholesale inventories rose 0.4 percent in April according to the Commerce Department in Washington, D.C. today. Analysts in the Reuters survey had forecast a 0.2 percent increase. The March results were revised up to 0.2 percent from the initial 0.1 percent report.
Job opening in the Labor Department JOLTS Survey (Job Openings and Labor Turnover Survey) rose to 5.376 million across the entire economy, the highest total in the 15 year history of the poll. The forecast was for a gain to 5.044 million openings, a minor increase from March's revised 5.109 million.
Hirings fell to 5.0 million from 5.1 million in March. The drop in new employees combined with the rise in openings suggets that prospective employers are having trouble finding qualified workers for their open positions.
The number of currently unemployed job seekers per offered position, a measure of the excess of labor supply, fell to 1.6 in April from 1.7 in March, the lowest in eight years.
Product turnover at wholesalers climbed 1.6 percent in April, the biggest jump since May 2013. Monthly Sales had been negative since last July averaging -0.75 percent and falling 3.6 percent in January alone. The median estimate was for a gain of 0.6 percent.
Part of the reason for the poor sales numbers is because they are a product of volume and price. The cost of energy products has fallen precipitously since last May, dragging down the wholesales sales totals.
Weak sales had led to an accumulation of inventory at wholesalers and an elevated sales to inventory ratio of 1.3 in February and March which declined to 1.29 in April. It was the first drop in the ration since late last year. The ration is an expression of how many months it would take to clear inventory at the current selling pace.
The inventory-to-sales ratio is considered key to future economic growth. If inventory at wholesalers is not moving through the sales cycle to retailers and then consumers, wholesale firms have no incentive to order more goods from manufacturers and economic growth suffers. A prolonged stockpiling of goods are wholesalers is a well know indictor of a potential recession.
Annual sales were down 3.3 percent in April and have been negative since December.
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