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Economy in Brief

U.S. Business Inventories Resume Accumulation
by Tom Moeller April 14,2010

Business inventories have resumed the trend toward modest accumulation. During February, a 0.5% increase was the strongest of four in the last five months. The gains follow 9.8% decumulation during all of 2009 and the recent increases are the first since mid-2008. Nevertheless, the increases have not kept up with improvement in sales and the I/S ratio remained at its low of 1.27.

Retail inventories have started to rise. The 0.3% February gain was third modest increase following sharp declines during 2008 & 2009. That accumulation owes, however, to the auto sector where inventories have been accumulating since September. Less autos, the rate of decumulation only has slowed to 4.1% y/y from the peak decumulation rate of 7.7% last fall. The slowdown has been led by furniture stores and general merchandise but apparel store inventories still are falling at near their strongest rate of 10.2% y/y.

Inventory accumulation in the factory sector compares with sharp decumulation through most of 2009. It has been accompanied by higher wholesale inventories, but here the improvement has been raised by higher oil prices. Less oil, wholesale inventories still are being shed at a 9.5% rate versus the 12.5% decline during all of last year.

The business sales and inventory data are available in Haver's USECON database.

Inventories, inflation dynamics, and the New Keynesian Phillips Curve from the Federal Reserve Bank of Richmond is available here.

Business Inventories (%) February January December Feb. y/y 2009 2008 2007
Total 0.5 0.2 -0.2 -6.7 -9.8 0.8 4.0
  Retail 0.3 0.1 0.2 -7.2 -10.4 -3.3 2.5
    Retail excl. Auto -0.1 -0.2 0.4 -4.1 -4.9 -1.9 2.7
  Wholesale 0.6 0.1 -0.8 -7.4 -10.5 3.7 6.4
  Manufacturing 0.5 0.3 -0.2 -5.6 -8.7 2.2 3.7
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