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Economy in Brief

U.S. Business Inventories Rose, Recent Trend Growth Slower
by Tom Moeller June 12, 2008

Total business inventories increased 0.5% after a little-revised 0.2% gain during March. The April rise was greater than expectations for a 0.3% increase. Annualized, three-month growth in inventories backed off further to 4.7% from the elevated 8.2% growth rate in February.

Retail inventories rose 0.4% following two month of decline. The three-month growth rate remained negative at -1.2%. Inventories of motor vehicle & parts fell at a 4.2% annual rate during the last three months due to further production cutbacks. Outside of autos, retail inventories rose 0.2% after a 1.1% drop during March and they are essentially unchanged during the last three months.

The industry detail in the retail sector indicated that furniture inventories fell at an annual rate of 1.2% during the last three months. Clothing & accessory store inventories fell hard at a 4.9% rate while general merchandise stores' inventories dropped at a 2.6% rate.

Factory inventories fell just slightly in April and three-month growth fell to 6.2% (AR) which was half the growth earlier this year. Despite the rise in oil prices, petroleum inventories fell at a 2.6% rate over the last three months after spiking earlier this year. Elsewhere, factory inventory accumulation has been fairly steady in 2008 at a 6.9% rate.

Wholesale inventories have risen at a 10.2% rate during the last three months, juiced by the rise in oil prices. Less petroleum, inventories still have been firm, however, rising at a 9.8% rate which was twice the rate of increase during all of last year.

Total business sales surged again, by 1.4% led by a 2.2% surge in factory shipments. Three-month growth held steady at a 6.2% annual rate.

The inventory-to-sales ratio for all business fell to 1.25 in April from 1.27 during 1Q and from 1.27 during the prior three years.

Protecting Consumers in the Credit Marketplace is yesterday's speech by Fed Governor Randall S. Kroszner and it can be found here.

Business Inventories April March Y/Y 2007 2006 2005
Total 0.5% 0.2% 5.4% 3.8% 5.9% 6.0%
  Retail 0.4% -0.6% 2.5% 2.6% 3.5% 2.3%
    Retail excl. Auto 0.7% -0.4% 2.3% 2.7% 4.9% 3.9%
  Wholesale 1.3% 0.1% 8.1% 5.5% 8.3% 7.3%
  Manufacturing -0.0% 0.9% 6.0% 3.7% 6.4% 8.9%
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