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Economy in Brief

U.S. Business Inventory Accumulation Slowing
by Tom Moeller June 15, 2005

Total business inventories rose just 0.3% in April, the weakest monthly increase this year. The gain lowered the three month change in inventories to 5.5% (AR), less than half the 12.1% peak rate of accumulation through last August. The ratio of inventories-to-sales fell back to the record low of 1.30.

Retail inventories rose 0.2% in April, the same as during a downwardly revised March. The three month change in retail inventories fell to 3.1% versus the peak of 12.4% one year ago. Excluding autos inventories also repeated a 0.2% gain in April and the three month rate of accumulation fell to 3.9% from 11.0% just this past January. Growth in inventories of furniture & electronics dropped to 4.3% from 18.5%, general merchandise inventory accumulation slowed to 7.3% from 12.1% and apparel inventories rose 5.8% versus a three month rate of gain of 12.2% through March.

Factory sector inventories ticked up just 0.1% in April and three month growth fell to 5.8%, half the three month rate in March.

Wholesale inventories rose a strong 0.8% but here too the three month growth rate of 8.2% is less than half last summer's peak rate of gain. 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 rose a sharp 1.2% (8.3% y/y).

Business Inventories April March Y/Y 2004 2003 2002
Total 0.3% 0.5% 7.6% 7.7% 1.4% 1.6%
  Retail 0.2% 0.2% 3.6% 5.7% 3.9% 5.9%
    Retail excl. Autos 0.2% 0.2% 6.1% 5.9% 2.0% 2.3%
  Wholesale 0.8% 0.6% 11.8% 10.8% 2.0% 1.2%
  Manufacturing 0.1% 0.7% 8.6% 7.5% -1.3% -1.8%
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