25) Economic Indicators: Wholesale Trade Report

by · October 16, 2010

What It Is

The Wholesale Trade Report reveals the result of a survey conducted by the U.S. Census Bureau across thousands of wholesalers across the country. The report is released every month, on or before the ninth day. The data in the report covers the two months before the actual release.

Basic Information

More than 4,000 wholesale traders become respondents to the survey. The traders are usually those who sell to retailers, who then deal with the consumers. However, there may be some of them who directly sell their goods to customers. One good example is Costco.

The results of the survey are often revealed six weeks after the last cutoff period. The report, moreover, may carry not just fresh information but also revisions from two previously published reports. Like in Durable Goods and Factory Orders, the figures are according to their values in current dollar. This also means that the value of the inventory can change from month to month even if the supply remains the same. Percentages are also used to determine the changes from year to year or the previous month. This is to eliminate or reduce volatility.

The report has three different types of statistics. These are the monthly inventories, monthly sales, and the ratio between inventory and sales. The information, furthermore, can also be classed as either non-durables or durables. Each of these categories will also contain about 8 to 10 industries.

One of the most looked-at statistics in the report is the I/S ratio, or the inventories-to-sale ratio. It can help explain the abnormality in the supply and demand in the market. For example, if the demand is high but the production is low, the ratio may be smaller. On the other hand, it goes up is supply exceeds demand.

It is also utilized by marketing experts and investors and even by the non-profit Conference Board as a lagging indicator. As the ratio continues to rise, so does the inventory levels and the cost of maintaining these inventories. This usually happens when the economy is in a slump or in recession. The demand by then goes down. Normally, it is at its peak when the country is in the middle of a slump.

How the Report Is Valuable

It complements other types of published reports. For example, it can help explain the figures found on the Durable Goods Report, which is released before Wholesale Trade Report. It is also used in conjunction with the Annual Benchmark Report for Wholesale Trade, which one can get during springtime. It informs readers of the gross margins and sales estimates per year of different industries.

It provides a good view of what’s happening among middlepersons. When used together with manufacturers’ and consumers’ reports, one can get a very good picture of how the entire business industry is doing. One can also extract historical data as far as 1946. Moreover, the information found in the report can be adjusted according to seasons. They are also raw.

The report may be used to determine future GDP and possible business trends.

Things to Watch Out For

Sometimes you don’t need this report, especially if the Durable Goods Report is comprehensive enough to answer a lot of questions. In fact, as long as there is no major change that happens in between the months, the report will not have any strong impact and will not generate buzz among wholesale traders. Moreover, the two months’ coverage seems to be quite a long time. The report also fails to provide more details on the different industries covered.

Tags: