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Highlights
There's plenty of talk that the destocking cycle is near an end but it's not apparent at the wholesale level. Wholesale inventories fell 0.9 percent in September with the year-on-year rate, now at minus 15.0 percent, showing no improvement. Increases in sales are necessary to ease inventory burn but September's news isn't that good. Sales did rise 0.7 percent but the increase is below the 1.1 percent gain in August. The stock-to-sales ratio fell 2 tenths to an ever more bare 1.18. Less-than-robust sales combined with continued destocking point to future job losses in the wholesale sector where today's employment report showed an 8,000 decrease in the component for the worst reading since July.
Details show a third straight deep contraction for metals inventories which may perhaps raise hopes for fourth-quarter restocking, which remember Alcoa predicted for aluminum at the beginning of the earnings season. Farm products and lumber also show continued steep draws. Builds are isolated but include computers, drugs, chemicals and autos, the latter showing a post-clunker effect. Petroleum stocks rose a second month. This report, along with the previously posted 1.0 percent decline in factory inventories, is folded into the business inventories report that will be posted a week from Monday and which will include retail inventories.
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