·
Total business inventories rose 0.3% in
October following an unrevised 0.5% gain the prior month. Despite these
increases, the ratio of inventories-to-sales held at the record low of
1.25 as business sales increased 0.8% (7.6% y/y).
· Business' hesitancy to build inventory is evident from several aspects of the latest release. While the annual growth in business sales has slowed to 7.6% from 9.7% during all of 2004, the growth in inventories has nearly halved to 4.1% from 7.7% last year. And the following detail underscore that hesitancy.
· Retail inventories rose just 0.1%
and even that small addition was due to a 0.7% rise in motor vehicle
inventories which followed large additions during the prior two months.
Excluding autos, inventories fell 0.1% and the September increase was
revised sharply lower. Clothing inventories managed a 0.3% (5.7% y/y)
but general merchandise fell 0.1% (+6.2% y/y). Inventories of furniture
fell by 0.3% (+5.8% y/y) for the fourth consecutive down month.
· Wholesale inventories rose just 0.2%. During the last ten years there has been a 66% correlation between the y/y change in wholesale inventories and the change in imports of nonpetroleum goods.
· Factory sector inventories jumped 0.6% led by a 3.7% surge at petroleum refineries.