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Economy in Brief

U.S. Business Inventories Up Again
by Tom Moeller February 14, 2006

Total business inventories posted another solid increase during December. The 0.7% increase followed an upwardly revised 0.6% November gain and was firmer than the 0.4% Consensus expectation.

The latest increases, however, have lagged the firm growth in business sales. As a result the ratio of inventories-to-sales fell back to the postwar low of 1.25.

Retail inventories gained 0.7% after an upwardly revised 1.0% November rise. A 0.9% rise in motor vehicle inventories was the fifth in as many months but auto inventories still fell 0.6% y/y. Retail inventories less autos rose 0.6% as furniture inventories increased 0.8% (3.5% y/y). Apparel inventories also rose a firm 0.6% (5.2$ % y/y) and general merchandise inventories posted a 0.6% (4.6% y/y) gain.

Wholesale inventories jumped 1.0% as imports on nonpetroleum goods jumped 3.4% (8.1% y/y). During the last ten years there has been a 67% correlation between the y/y change in wholesale inventories and the change in imports of nonpetroleum goods.

Factory sector inventories added to the prior month's gain and rose 0.5%.

Business Inventories Dec Nov 2005 2004 2003
Total 0.7% 0.6% 4.3% 7.7% 1.5%
  Retail 0.7% 1.0% 2.7% 5.5% 3.9%
    Retail excl. Autos 0.6% 0.4% 4.4% 5.9% 2.0%
  Wholesale 1.0% 0.5% 6.7% 10.8% 2.0%
  Manufacturing 0.5% 0.3% 4.3% 7.7% -1.1%
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