Deflation Drives Down Distributor Growth - Modern Distribution Management

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Deflation Drives Down Distributor Growth

Stronger growth expected in 2017, as prices stabilize and economy grows.

Deflation drove down the real value of production in 13 of the 19 major wholesale distribution sectors in 2016, according to the newly released 2017 Economic Benchmarks for Wholesale Distribution report. Aggregate revenues of wholesaler-distributors fell 0.4 percent for the year, but increased 2.2 percent when inflation (or deflation) is considered.

Weak commodity prices hit the oil & gas sector hard. While actual revenues fell 8.6 percent for oil & gas during 2016, when adjusted for inflation sales actually increased 13.6 percent. If prices stabilize as expected in 2017, the sector should experience solid growth from its much smaller base.

The agricultural products sector also experienced significant pressure from deflation. Revenue in 2016 fell 6.7 percent when compared with 2015; adjusted for inflation, the sector grew 3.4 percent.

The economy and the wholesale distribution industry appear to be turning a corner for 2017, however. Positive outlooks for employment, wages and corporate investment are expected to boost U.S. economic growth overall. All 19 major wholesale distribution sectors are expected to post actual (not adjusted for inflation) revenue growth in 2017 and 2018.

This is the 12th edition of MDM's Economic Benchmarks for Wholesale Distribution, published each year to provide a comprehensive look at the wholesale distribution industry. The data in the report is based on information collected by the U.S. Census Bureau, the Bureau of Labor Statistics and the Bureau of Economic Analysis – and incorporates the periodic revisions released the U.S. government.

Distributors use the Economic Benchmarks for Wholesale Distribution reports to benchmark their performance with data on how much sales and sales per employee have changed in their lines of trade, how much weekly earnings have changed, which end-markets are consuming their products, how sales and inventories have fared quarter-by-quarter and how many companies are competing in their lines of trade.

Learn more about the 2017 Economic Benchmarks for Wholesale Distribution at

And join us on Thursday, June 8, at 1 p.m. ET for the 2017 Mid-Year Economic Update, a free webcast featuring Brian Lewandowski, associate director at the business research division of the University of Colorado Boulder's Leeds School of Business, and MDM Publisher Tom Gale. In the 60-minute program, Brian and Tom will discuss the economic drivers of the last year and the industry's outlook through 2018. Learn more or register now. 

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