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Economy in Brief

U.S. Business Inventories Slipped
by Tom Moeller April 13, 2006

Total business inventories slipped marginally during February following an upwardly revised 0.6% gain during the prior month. Consensus expectations had been for a 0.3% increase for February.

Retail inventories reversed the prior month's downwardly revised 0.3% increase. Motor vehicle inventories fell 0.7% (0.0% y/y). Retail inventories less autos also fell marginally (+3.5% y/y) and January accumulation was revised down to 0.3% from 0.5%. Furniture inventories rose a strong 0.7% (6.6% y/y) and the prior month's gain was revised up but general merchandise inventories fell by 0.6% (+2.3% y/y) after a downwardly revised 0.4% decline during January. Apparel inventories rose 0.3% (2.3% y/y after a 0.4% January decline.

Wholesale inventories rose 0.8% due to a 1.0% gain in nondurables, lifted by broad based strength. Durables rose 0.6% (6.6% 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 slipped 0.4% after an upwardly revised 1.1% January gain.

The inventory to sales ratio for total business rose modestly to 1.26 from an upwardly revised 1.25 during January.

Business Inventories Feb Jan Y/Y 2005 2004 2003
Total -0.0% 0.6% 3.7% 4.5% 7.9% 1.5%
  Retail -0.3% 0.3% 2.4% 2.7% 6.7% 3.8%
    Retail excl. Autos -0.0% 0.3% 3.5% 4.5% 7.1% 1.9%
  Wholesale 0.8% 0.2% 6.2% 7.1% 9.8% 1.8%
  Manufacturing -0.4% 1.1% 3.2% 4.4% 7.7% -1.1%
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