Manufacturing and Trade Sales: Year-Over-Year Monthly Losing Streak Hits 7, Inventories Remain Bloated

What a disastrous day this has been for economic news: anemic retail sales, falling industrial production, and now another month of falling manufacturing and trade sales.

From the Census Bureau:

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for July, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,328.0 billion, up 0.1 percent (±0.2%)* from June 2015, but was down 2.7 percent (±0.5%) from July 2014.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,812.4 billion, up 0.1 percent (±0.1%)* from June 2015 and were up 2.6 percent (±0.5%) from July 2014.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of July was 1.36. The July 2014 ratio was 1.29.

That’s seven months in a row of declining year-over-year sales:

Readers should note the seasonally adjusted positive result for July sales compared to June, despite the deep $51.5 billion not seasonally adjusted dive which occurred.

Meanwhile, as seen above, inventories, which are already too high, went up, though only slightly.

Barring solid expectations of large sales increases during the next few months, a year-over-year sales decline of 2.7 percent combined with a 2.6 percent 12-month increase in inventories cries out for a significant inventory pullback, which would translate in short order into a decline in orders and production.