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Economy in Brief

U.S. Inventory Accumulation Showed Some Life
by Tom Moeller July 16, 2007

After deceleration through April, total business inventories in May rose 0.5% following a 0.4% increase the month prior. The increases were sufficient to raise the three month growth rates. Consensus expectations had been for a 0.3% one month rise.

Three month average growth in business inventories rose to 0.8%, its highest since last October.

Business sales jumped 1.3% (4.0% y/y). Wholesale sales led the gain with a 1.3% (8.7%y/y) jump and retail sales surged 1.6% (4.9% y/y) for May. Factory shipments rose 1.0% for the second month.

Due to the strong sales gain in May, the inventory to sales ratio fell to its lowest level since last August.

Retail inventories rose 0.6%, double the rise in April. General merchandise inventories halved their April rise with a 0.4% (6.6% y/y) but clothing store inventories surged 0.7% (8.1% y/y) after a 0.2% April decline. Furniture inventories fell 0.7% (-0.2% y/y) after no change during April. Auto inventories fell for the fourth straight month.

Business Inventories May April Y/Y 2006 2005 2004
Total 0.5% 0.4% 4.0% 5.9% 6.2% 7.9%
  Retail 0.6% 0.3% 1.6% 3.2% 2.8% 6.8%
    Retail excl. Autos 0.7% 0.4% 4.3% 4.5% 4.5% 7.2%
  Wholesale 0.5% 0.3% 6.7% 8.6% 7.4% 9.7%
  Manufacturing 0.3% 0.4% 4.3% 6.4% 7.9% 7.7%
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