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Economy in Brief

U.S. Business Inventories' Increase  Moderate
by Tom Moeller November 16, 2007

Total business inventories rose a moderate 0.4% during September following the prior month's 0.3% gain. The three month change in inventories remained stable with the prior few months, up from earlier this year but half the growth rates seen last year. That slowing remained a function of the slower growth in sales

Retail inventories ticked up just 0.1%. Inventories of motor vehicles & parts dealers actually fell a slight 0.1% (+2.1% y/y) after the 1.5% spurt during August. Excluding autos, retail inventories rose a modest 0.2% following a little revised, negligible August decline. Furniture inventories spurted 1.3% (3.3% y/y) and the three month change rose to an excessive (9.9%, AR). At clothing & accessory stores inventories rose 0.1% and offset a 0.1% August downtick and it left the three month at a manageable 0.0%. Inventories at General merchandise stores also seemed under control. a 0.4% gain followed declines during the prior three months and three month growth was a negative 2.8%.

Wholesale inventories rose 0.8% following a very much upwardly revised 0.7% August increase. Petroleum inventories fell for third straight month (-1.3% y/y) and less petroleum, wholesale inventories rose 0.9%, up 5.4% y/y which is a y/y growth rate which has halved versus late last year. During the last ten years there has been a 59% correlation between the annual change in wholesale inventories les petroleum and the change in merchandise imports.

Factory inventories rose 0.6% (2.2% y/y) after two months of little change. Three month growth in manufacturers' inventories was 2.3% versus a 6.4% rate of growth during all of last year.

The Role of Money in Monetary Policy: Why Do the Fed and ECB See It So Differently? from the Federal Reserve Bank of Kansas City can be found here.

Business Inventories September August Y/Y 2006 2005 2004
Total 0.4% 0.3% 3.3% 5.9% 6.2% 7.9%
  Retail 0.1% 0.5% 2.8% 3.2% 2.8% 6.8%
    Retail excl. Autos 0.2% -0.0% 3.2% 4.5% 4.5% 7.2%
  Wholesale 0.8% 0.7% 5.2% 8.6% 7.4% 9.7%
  Manufacturing 0.6% -0.1% 2.2% 6.4% 8.9% 7.7%
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