- Prior month of 0.1%
- Sales: In March 2023, merchant wholesaler sales reached $655.3 billion, a -2.1% decrease from February and a -2.9% decrease from March 2022. January to February 2023 change was an unrevised increase of 0.4%.
- Inventories: At the end of March, total inventories were $918.5 billion, virtually unchanged from February and down -9.1% from March 2022. February to March 2023 change was revised to virtually unchanged.
- Inventories/Sales Ratio: The March ratio was 1.40, compared to 1.25 in March 2022.
With sales falling while inventories remain the same, the inventory/sales ratio increased to 1.4 from 1.25. That was the highest level going back to the pandemic.
An increase in the inventory-to-sales ratio indicates that businesses have more inventory relative to their sales. Economically, this can imply several things:
Slower sales: An increase in the inventory-to-sales ratio may suggest that sales are slowing down, causing inventory to build up as businesses struggle to sell their products. This could be due to reduced demand or changing consumer preferences.
Overproduction: An increase in the ratio might also indicate that businesses are producing more goods than the market can absorb, leading to an accumulation of inventory.
Anticipation of future demand: Sometimes, businesses might intentionally increase their inventory levels in anticipation of a surge in demand, such as before a holiday season or in response to expected supply chain disruptions.
Inefficient inventory management: A higher inventory-to-sales ratio could be a sign of inefficient inventory management, where businesses are not effectively managing their stock levels to match sales.
A persistently high inventory-to-sales ratio can be concerning, as it may lead to businesses cutting back on production, reducing staff, or offering discounts to clear excess inventory, which could negatively impact the economy. However, it is essential to consider the context and industry-specific factors when interpreting changes in the inventory-to-sales ratio.
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