What is a 'Wholesale Trade'

A wholesale trade is an economic indicator that measures the value in U.S. dollars of all merchant wholesalers' sales and inventories. Wholesale trade is one component of business sales and inventories. Only those firms which sell to governments, institutions and other businesses are considered part of wholesale trade.

BREAKING DOWN 'Wholesale Trade'

Wholesale-trade data gives investors a closer look at the consumer economy, as sales and inventory numbers can be a leading indicator of consumer trends. By looking at the ratio of sales to inventories, investors can see whether or not production may grow or slow in the future.

For example, if inventories are growing more slowly than sales, producers will have to make more product so that no shortages occur. Alternatively, if sales growth is slower than inventory growth, there will be an excess of supply, and production should slow in coming months. Because manufacturing is such a large part of GDP, the wholesale-trade data can be a valuable tool for keeping a finger on the pulse of the economy.

Equity markets are positively affected by an increase in production, as corporate profits increase. The bond markets, on the other hand, prefer moderate growth so as to stem inflation.

RELATED TERMS
  1. Business Inventories

    An economic figure that tracks the dollar amount of inventories ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors ...
  3. Wholesaling

    The sale and distribution of goods to users other than end consumers. ...
  4. Average Inventory

    A calculation comparing the value or number of a particular good ...
  5. Ending Inventory

    The value of goods available for sale at the end of the accounting ...
  6. Retail Inventory Method

    An accounting procedure for estimating the value of a store's ...
Related Articles
  1. Personal Finance

    Understanding Wholesale Banking

    Wholesale banking refers to banking services for merchant banks and other financial institutions.
  2. Investing

    Days Sales of Inventory

    Days Sales of Inventory, also called Days Inventory Outstanding, is a key financial measurement of a company's performance pertaining to inventory management. In simple terms, it tells how many ...
  3. Investing

    How to Analyze a Company's Inventory

    Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory.
  4. Investing

    How to Calculate Average Inventory

    Average inventory is the median value of an inventory at a specific time period.
  5. Investing

    What is Involved in Inventory Management?

    Inventory management refers to the theories, functions and management skills involved in controlling an inventory.
  6. Insights

    Jobs Report vs. Jobless Claims: What Gives?

    The May jobs report was bad, but jobless claims and wholesale inventories were good. What gives?
  7. Investing

    Explaining Carrying Cost of Inventory

    The carrying cost of inventory is the cost a business pays for holding goods in stock.
  8. Investing

    Reading The Inventory Turnover

    Inventory turnover is a ratio that shows how quickly a company uses up its supply of goods over a given time frame. Inventory turnover may be calculated as the market value of sales divided by ...
  9. Investing

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  10. Investing

    Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.
RELATED FAQS
  1. What economic indicators are important for investing in the wholesale sector?

    Understand what economic indicators are important for people looking to invest in the wholesale sector. Learn how a company ... Read Answer >>
  2. What is the average annual dividend yield of companies in the wholesale sector?

    Find out more about the wholesale sector, what the dividend yield measures and the average annual dividend yield for companies ... Read Answer >>
  3. What is the average debt/equity ratio of companies in the wholesale sector?

    Learn about the standard debt-to-equity ratios in the wholesale sector, and discover some of the many subindustries in the ... Read Answer >>
  4. Why should investors care about the Days Sales of Inventory (DSI)?

    Learn about days sales of inventory and what it measures; understand why an investor would want to know a company's days ... Read Answer >>
  5. What metrics can be used to evaluate companies in the wholesale sector?

    Find out which metrics are used for the analysis and valuation of wholesale distributors, and learn what makes a metric appropriate ... Read Answer >>
  6. How do you analyze inventory on the balance sheet?

    Learn how to analyze inventory using financial statements and footnotes by doing ratio analysis and performing qualitative ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center