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Economy in Brief

U.S. Inventories Up
by Tom Moeller March 15, 2005

Total business inventories jumped 0.9% in January following an unrevised 0.2% December rise. The pace of inventory accumulation has accelerated markedly since 2002 but has not kept pace with the improvement in sales growth. Consequently the ratio of inventories-to-sales fell through last year and in January remained at the record low.

Inventory accumulation was strongest in January at the factory level where a 1.3% gain was the largest monthly increase since 1988.

Wholesale inventories jumped 1.1%. 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.

Retail inventories rose 0.4% in January following a 0.3% December increase. Accumulation of non-auto retail inventories, however, again was quite strong up 0.8% led by a 19.8% y/y gain in building materials and a 7.8% y/y rise in furniture & electronics.

Overall business sales jumped 0.8% (+11.1% y/y).

Business Inventories Jan Dec Y/Y 2004 2003 2002
Total 0.9% 0.2% 8.6% 7.9% 1.9% 1.5%
  Retail 0.4% 0.3% 6.4% 6.0% 5.0% 6.0%
    Retail excl. Autos 0.8% 1.1% 7.5% 6.5% 2.9% 2.6%
  Wholesale 1.1% 0.4% 12.3% 11.2% 2.2% 0.4%
  Manufacturing 1.3% 0.1% 8.5% 7.5% -1.3% -1.8%
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