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Economy in Brief

U.S. Business Inventories Unchanged
by Tom Moeller August 11, 2005

Total business inventories were unchanged in June following an unrevised 0.1% gain in May. The weakness in accumulation lowered the three month change in inventories to 1.4% (AR) versus a 12.1% peak rate of accumulation through last August. The ratio of inventories-to-sales dropped to a new record low of 1.29 as business sales rose 0.7% (7.8% y/y).

Retail inventories fell 0.4% due to strong auto sales in June and the three month change went slightly negative versus the peak of 12.4% last April. Excluding autos, however, retail inventories jumped 0.6% after an upwardly revised 0.7% May gain. Furniture inventories were again strong, up 1.3% (9.0% y/y) and inventories of apparel rose 0.9% (5.3% y/y).

Factory sector inventories fell slightly for the third consecutive month pulling three month negative for the first time since 2003.

Wholesale inventories jumped 0.7% and three month growth rose to 6.9%. 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.

Business Inventories June May Y/Y 2004 2003 2002
Total 0.0% 0.1% 5.9% 7.7% 1.4% 1.6%
  Retail -0.4% 0.2% 2.2% 5.7% 3.9% 5.9%
    Retail excl. Autos 0.6% 0.7% 6.3% 5.9% 2.0% 2.3%
  Wholesale 0.7% 0.3% 10.2% 10.8% 2.0% 1.2%
  Manufacturing -0.0% -0.2% 6.4% 7.5% -1.3% -1.8%
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