Reasons for Revisions

There are several reasons for revising estimates from the Monthly Wholesale Trade Survey (MWTS):

• Timing. Respondents have more time to prepare their annual reports than their monthly reports. The annual responses are requested at a time when many firms have already compiled audited book figures for their own use. This includes adjustments for returns, allowances, and other customer transactions. The timing of the annual survey is such that we are also able to obtain independent verification of the reported data from such sources as a company’s annual report. On the other hand, respondents to the monthly survey have just a few weeks to provide reports of their sales and end-of-month inventories. Sometimes these reports are based on incomplete or unaudited records, including estimates by the respondents.



• Sampling. The annual sample is larger than the sample used to develop the estimates for any given month.



• Response. The annual estimates are based on more reported data than are the monthly estimates. The response to the Annual Wholesale Trade Survey (AWTS) is required by law, while the response to the MWTS is voluntary. This results in a dollar volume response rate above 90 percent for both sales and inventories on the AWTS, and a rate of approximately 65-70 percent on the MWTS. An imputation process accounts for the sales and inventories for firms that do not respond. This process assumes that firms that do not respond have trends similar to the firms that do respond in their respective kind-of-business.

Summary of Changes

Unadjusted estimates of monthly sales are revised for January 2004 through January 2007, as well as end-of-month inventory estimates for January 1999 through January 2007. The revised unadjusted estimates reflect:

• Results from the 2005 AWTS.



• Revisions to previously published annual estimates from the prior sample, due to the introduction of estimates from the new sample.

New seasonal, trading-day, and holiday factors are computed and used to adjust sales for January 2001 through January 2007. For inventories, new seasonal factors are computed and used to adjust inventories for January 1996 through January 2007. Adjusted estimates start three years before the revised unadjusted estimates because the revised unadjusted estimates can affect the computation of seasonal factors as far back as three years ago. For both sales and inventories the new seasonal factors are computed using unadjusted estimates as input to the seasonal adjustment program.

Estimates of Monthly Sales

For select NAICS codes, corrections are applied to the monthly wholesale sales estimates for August 2006 through January 2007. Then, for each NAICS code, the monthly wholesale sales estimates for January 1992 (the beginning of the series) through August 2006 from the prior sample are linked to the estimates derived from the current sample. The linkage is performed for each NAICS level by multiplying the sample-based estimates, or unmodified estimates, from the prior sample by a geometric mean. The geometric mean is computed as the square root of the product of two ratios. The numerators of the ratios are the unmodified sales estimates for August and September 2006 from the current sample. The denominators of the ratios are the unmodified estimates for August and September 2006 from the prior sample.

After performing the above linkage, the resulting sales estimates for December 2003 through January 2007 are input to the benchmarking program. The estimates for a given NAICS code are revised in a manner that:

• For 2004 and 2005, constrains the sum of the 12 monthly sales estimates to equal the corresponding annual sales estimate.



• Minimizes the sum of the squared differences between the month-to-month changes of the input and revised estimates for December 2003 through January 2007.



• Uses the previously published December 2003 sales estimate as a constraint, linking the revised estimates to the previously published sales estimates and resulting in no revision to the December 2003 estimate.

A mathematical result of the benchmarking methodology is that all revised estimates following the end of the last benchmark year (2005) are derived by multiplying the corresponding input estimates by the ratio of the benchmarked-to-input estimate for the last month of the last benchmark year. Therefore, for a given NAICS code, a ratio of the benchmarked-to-input estimate for December 2005 is computed. Monthly sales estimates after December 2005 are multiplied by this constant ratio, which is called a carry-forward factor, to derive published sales estimates. The carry-forward factor remains the same until the next benchmarking operation.

For select NAICS codes, corrections are applied to the monthly wholesale end-of-month inventory estimates for August 2006 through January 2007. Then, for each NAICS code, the monthly wholesale end-of-month inventory estimates for January 1992 (the beginning of the series) through August 2006 from the prior sample are linked to the estimates derived from the current sample. The linkage is performed using a procedure similar to the one used for sales, except the geometric mean is based on end-of month inventory.

After performing the above linkage, the resulting end-of-month inventory estimates for December 1998 through January 2007 are input to the benchmarking program. The estimates for a given NAICS code are revised in a manner that:

• For 1998 through 2005, constrains the December end-of-month inventory estimates from MWTS to equal the end-of-year inventory estimates derived from the AWTS.



• Minimizes the sum of squared differences between the month-to-month changes of the input and revised estimates for December 1998 through January 2007.



• Uses the previously published December 1998 estimate as a constraint, linking the revised estimates to the previously published estimates and resulting in no revision to the December 1998 estimate.

For a given NAICS code, end-of-month inventory estimates subsequent to December 2005 are derived by multiplying the input estimates by the ratio of the benchmarked-to-input estimate for December 2005. This ratio is the carry-forward factor for inventory, and it remains the same until the next benchmarking operation.

Published Tables

There are a few changes to the published tables between the 2006 and 2007 releases. The following summarizes these changes:

• The “Revision of Annual Sales and Inventories” table previously published in the 2006 introduction text has been released in 2007 as “Table 1. Revision Summary for Annual Sales and End-of-Year Inventories of Merchant Wholesalers, Except Manufacturers’ Sales Branches and Offices.”



• “Table 1. Revised Adjusted and Unadjusted Estimates of Monthly Sales, Inventories, and Inventories/Sales Ratios of Merchant Wholesalers, Except Manufacturers’ Sales Branches and Offices” previously published in 2006 has been separated into two tables for 2007 – “Table 2. Revised (Adjusted) Estimates of Monthly Sales, Inventories, and Inventories/Sales Ratios of Merchant Wholesalers, Except Manufacturers’ Sales Branches and Offices” and “Table 3. Revised (Not Adjusted) Estimates of Monthly Sales, Inventories, and Inventories/Sales Ratios of Merchant Wholesalers, Except Manufacturers’ Sales Branches and Offices.”



• Two tables previously published in 2006 are no longer published with the Annual Revision of Monthly Wholesale Distributors: Sales and Inventories. “Table 2. Estimated Annual Purchases, Gross Margins, and Gross Margins as a Percent of Sales for Merchant Wholesalers, Except Manufacturers’ Sales Branches and Offices” and “Table 4. Estimated Coefficients of Variation of Annual Sales, End-of-Year Inventories, Purchases, Gross Margins, and Gross Margins as a Percent of Sales” are now published as part of the 2005 AWTS.
  

Source: U.S. Census Bureau
E-mail questions to: Monthly Wholesale Trade Survey
Last Revised: March 29, 2007

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