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Economy in Brief

U.S. Inventory Accumulation Strong
by Tom Moeller February 15, 2005

Total business inventories rose another 0.2% after the 1.1% surge in November. The full year increase of 7.8% was the strongest since 1988.

Retail inventories rose 0.3% in December following a 1.1% increase the prior month. Accumulation of non-auto retail inventories jumped for the second month, up 1.0%, and the year's accumulation was the strongest in ten led by a 16.9% y/y gain in building materials. Inventories of furniture (6.8% y/y) and general merchandise (6.4% y/y) also rose strongly though apparel accumulation slowed to just 1.0%.

Wholesale inventories rose another 0.4% and the yearly gain of 11.2% was a record. During the last ten years there has been a 64% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.

Overall business sales jumped 1.0% (+10.6% y/y) on the strength of yearend auto sales.

The ratio of inventories-to-sales fell slightly back to the record low of 1.30. Moreover, though the rate of inventory accumulation more than quadrupled last year, it lagged the double digit gain in sales.

Business Inventories Dec Nov 2004 2003 2002
Total 0.2% 1.1% 7.8% 1.9% 1.5%
  Retail 0.3% 1.1% 6.0% 5.0% 6.0%
    Retail excl. Autos 1.0% 1.1% 6.4% 2.9% 2.6%
  Wholesale 0.4% 1.2% 11.2% 2.2% 0.4%
  Manufacturing -0.1% 1.0% 7.3% -1.3% -1.8%
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