U.S. merchant wholesaler sales reached $817.4 billion in May, up 3.4% from April and up 18.1% year-over-year, while inventories advanced just 0.1% — a gap that pulled the industry's inventory-to-sales ratio down to 1.15, its sharpest one-month drop in recent readings.

The U.S. Census Bureau released the monthly wholesale trade report on July 8. The sales figure covers merchant wholesalers, excluding manufacturers' sales branches and offices, adjusted for seasonal variation and trading-day differences but not for price changes. April's gain was revised up from 2.0% to 2.2%.

The divergence matters for distribution economics. When sales grow 18.1% annually against 4.0% inventory growth, distributors are effectively squeezing more revenue out of the same working capital. The May I/S ratio of 1.15 compares with 1.19 in April and 1.31 in May 2025, meaning the destocking-and-demand imbalance has persisted and accelerated for a full year.

What drove the May sales gain?

Durable goods did the heavy lifting on a monthly basis. Durable sales jumped 4.2% month-over-month in May after a revised 1.5% April gain (up from an initially reported 0.9%), and spiked 18.7% year-over-year.

Nondurable sales rose 2.6% month-over-month, decelerating from April's 2.9%, and were up 17.4% year-over-year.

Petroleum products again powered the nondurable result, reflecting price effects tied to the Iran war and Strait of Hormuz conflict that began at the end of February. But the petroleum surge is cooling: May's 8.6% gain matched April's rate and came in well below March's 25.2% spike.

How slow is inventory growth?

Total wholesale inventories rose 0.1% in May after an upwardly revised 0.7% April increase (from 0.6%). The monthly figure trailed the Bureau's 0.3% advance estimate and marked another straight month of slower stock growth following a 1.5% March jump — the largest since mid-2022.

Year-over-year, inventories were up 4.0%.

The breakdown by category:

• Durable goods inventories: up 0.1% month-over-month, up 3.3% year-over-year
• Nondurable goods inventories: up 0.1% month-over-month, up 5.4% year-over-year

Nondurables carrying a higher year-over-year inventory build than durables is consistent with petroleum frontloading earlier in the year, as distributors stocked up ahead of price shocks tied to the conflict.

What does the 1.15 ratio signal?

The seasonally adjusted inventories/sales ratio of 1.15 represents a considerable one-month decline from April's 1.19 and continues a downtrend from 1.31 in May 2025. The trajectory shows sales consistently outpacing stockpiles, with that spread widening in May.

For distributors, a falling I/S ratio cuts two ways. It signals healthy demand throughput and lean working capital — a tailwind for gross margin returns and cash conversion. It also raises restocking pressure: if demand holds at current rates, replenishment orders will need to accelerate, or product availability in tight categories will strain customer service levels.

What comes next?

The petroleum category remains the swing factor. Its monthly sales gains have already halved from March's 25.2% pace to 8.6% in both April and May, and further cooling would compress headline wholesale sales growth in coming months, even as underlying durable goods momentum — 4.2% in May — suggests broader demand beyond the energy channel. Watch whether June inventory growth rebounds toward the Bureau's estimates, which would signal distributors rebuilding stock to chase the sales trend.