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Economy in Brief

U.S. Inventories Accumulate Further
by Tom Moeller October 18, 2004

Total business inventories rose 0.7% in August, the twelfth consecutive month of accumulation. During the four quarters ended in 2Q04, inventory accumulation added between 0.5 and 1.2 percentage points to real GDP growth versus subtractions in early 2003.

Retail inventories rose 0.7% in August paced by higher auto inventories (16.5% y/y). Non-auto inventories rose 0.5% after an upwardly revised uptick in July.

Wholesale inventories rose 0.9%. During the last ten years there has been a 62% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.

Overall business sales rose 0.7% (+10.9% y/y) following an upwardly revised 0.9% June increase.

The ratio of inventories-to-sales fell to 1.31, well below the 1.37 averaged last year.

Business Inventories Aug July Y/Y 2003 2002 2001
Total 0.7% 1.0% 7.7% 1.9% 1.5% -4.5%
  Retail 0.7% 0.7% 9.1% 4.9% 6.0% -2.8%
    Retail excl. Autos 0.5% 0.1% 5.5% 3.0% 2.6% -1.1%
  Wholesale 0.9% 1.5% 9.8% 2.2% 0.4% -4.5%
  Manufacturing 0.5% 1.0% 4.8% -1.3% -1.8% -6.1%
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