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Economy in Brief

U.S. Business Inventories Gain
by Tom Moeller July 14, 2006

Total business inventories increased 0.8% during May, about matched the prior month's strong gain and easily surpassed Consensus expectations for a 0.4% rise.

Retail inventories jumped 1.6% after a slight slip during April. Motor vehicle inventories surged 3.2% (4.1% y/y) while less autos, retail inventories rose a strong 0.8% led by a 1.1% (6.3% y/y) jump in apparel. General merchandise inventories firmed 0.7% (-0.7% y/y) but furniture inventories rose just 0.2% (5.2% y/y).

Wholesale inventories jumped 0.8% as petroleum inventories surged 7.1% (35.9% y/y). Durables rose 0.8% (8.7% 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 modestly after a 1.0% April spike.

The inventory to sales ratio for total business slipped back to its low 1.25 as business sales jumped 1.4% (8.8% y/y).

Business Inventories May April Y/Y 2005 2004 2003
Total 0.8% 0.7% 5.1% 4.4% 7.6% -1.0%
  Retail 1.6% -0.1% 4.1% 2.7% 6.7% 3.8%
    Retail excl. Autos 0.8% 0.2% 4.2% 4.5% 7.1% 1.9%
  Wholesale 0.8% 1.3% 7.8% 7.1% 9.8% 1.8%
  Manufacturing -0.0% 1.0% 3.9% 4.0% 6.9% -7.4%
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