Key Takeaways:

  • Overall wholesale volume continues to rebound, up 2% in July;
  • Wholesale growth has resulted from higher prices as well as more units sold;
  • Sales of durable and non-durable goods were each up, with non-durables nearly triple the growth of durables;

By Manuel Gutierrez, Consulting Economist to NKBA

 

Sales by merchant wholesalers have risen strongly since last year’s pandemic-induced economic decline. Their sales grew 2% in July, reaching $601 billion for the month.

The roughly 300,000 merchant wholesale businesses in the U.S. handle over $6.5 trillion worth of product annually, or about one-third of total GDP. They clearly are of critical importance to the American economy.

Wholesale products are typically split into durable and non-durable goods, according to whether their lifespan exceeds three years or not. Sales of both types also rose in July. Durables rose 1.1% to $288 billion (Figure 1, blue line), with non-durables increasing by a much higher 2.8% to $313 billion (red line).

Within durables, July sales for three products increased faster than the 1.1% composite. Metals & Minerals rose by 6% to $20.7 billion, Machinery & Equipment was up 4.6% to $46.2 billion, and Home Furnishings gained 2.5% to $9.4 billion (Figure 2, left panel).

Lumber & Construction Materials and Home Furnishings remain among the top categories in year-to-year wholesale sales growth, up 32% and 25%, respectively

Several categories showed sales declines in July (Figure 2). The biggest losses were in Lumber & Construction Materials, which dropped 5.4% to $18.2 billion, no doubt driven by the collapse in lumber prices, which have come down from their stratospheric levels of a few months ago.

Compared to last year, all durable product sales are higher today. This reflects both strong current demand for many durables, and the fact that last year at this time, sales were just starting to recover from the pandemic shutdown.

Leading with the largest gains are Metals & Minerals, up a remarkable 73.3% in July; Miscellaneous Durables (including a large variety of products), up 39.7%; Lumber & Construction Materials, which rose by 31.9%, and Home Furnishings, 24.9% higher for the month.

There is a similar pattern in non-durable product categories (Figure 3). While sales for many increased in July, two categories recorded fewer sales in July than in June.

For the month, Apparel sales fell by 3.7%to $14.1 billion, while Miscellaneous Non-durables, including products as diverse as brooms, tropical fish and clothes hangers, dipped a negligible 0.1% to $26.7 billion.

On the growth side, the two categories with the biggest increases were Petroleum Products and Drugs, together accounting for nearly half (48%) of non-durable sales.Combined, they generated sales of $150 billion in July.

For the year, it’s no surprise that sales of Petroleum Product are up 90.2% over the last year. This is driven mostly by the rise of gasoline prices at the pump. Farm Product sales are up 42.7% over the past 12 months, and sales of Apparel have gained 27.8% since July 2020.

Note that higher wholesale sales reflect price increases as well as a greater number of units sold.

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