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Economy in Brief

U.S. Business Inventories Rebuilt
by Tom Moeller October 14, 2005

August total business inventories reversed the prior month's decline and rose 0.4%. The increase was double Consensus expectations, the first since May and the largest since March. Nevertheless, the ratio of inventories-to-sales remained at the record low of 1.26 due to a 0.4% (7.1% y/y) rise in business sales.

The 0.9% rise in retail inventories gained back half of the prior month's decline due to a 1.7% increase in motor vehicle inventories but excluding autos inventories jumped 0.6% (5.9% y/y). Furniture inventories fell 0.3% (+6.1% y/y) but general merchandise surged 1.3% (6.9% y/y).

Factory sector inventories fell slightly after a sharp 0.6% July gain.

Wholesale inventories increased 0.5%. 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.

Economic Flexibility, a speech by Federal Reserve Chairman Alan Greenspan, is available here.

Business Inventories Aug July Y/Y 2004 2003 2002
Total 0.4% -0.4% 3.8% 7.7% 1.4% 1.6%
  Retail 0.9% -1.8% -0.4% 5.7% 3.9% 5.9%
    Retail excl. Autos 0.6% -0.0% 5.9% 5.9% 2.0% 2.3%
  Wholesale 0.5% 0.1% 7.7% 10.8% 2.0% 1.2%
  Manufacturing -0.1% 0.6% 5.3% 7.7% -1.1% -5.4%
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