The U.S. wholesale report
The U.S. wholesale report revealed the largely expected 0.3% February wholesale sales rise with a slightly smaller 0.2% inventory increase. The mix capped a two-month stretch of disappointing sales figures but huge inventory gains fueled by tariff "front running," as importers are disproportionately captured at the wholesale level of production. Faster wholesale growth for sales than inventories in February followed the opposite mix in every month since May, leaving a climb in the inventory-to-sales (I/S) ratio to 1.35 in January and February from 1.34 in December, and a recent-low of 1.26 in May of 2018. Analysts still expect Q1 GDP growth of 2.2%, with a boost earlier this morning from strong trade balance data. Analysts expect a $39 B inventory subtraction for Q1 GDP after a $7.0 B addition in Q4. Analysts expect the accumulation rate to fall an additional $4 B in Q2 to leave a more sustainable $54 B clip, versus the hefty $96.8 B pace of Q4. Analysts still expect a 0.1% February business inventory rise after an upwardly-revised 0.9% (was 0.8%) December gain. The total business I/S ratio likely sat at 1.39 in February for a third consecutive month, versus a recent-low of 1.34 last June.