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Economy in Brief

U.S. Business Inventory Accumulation Slows
by Tom Moeller   April 13, 2011

The U.S. Commerce Department reported that business inventories rose a lessened 0.5% in February following a 1.0% January gain, last month reported at 0.9%. A 0.8% gain in inventories had been expected by Bloomberg. The slower rate of inventory accumulation was accompanied by an inventory-to-sales ratio which remained near its all-time low as business sales rose 0.2% (10.9% y/y).

The February slowdown in inventory accumulation was led by a -0.4% decline in retail inventories, paced by a 1.4% drop (+8.4% y/y) in motor vehicles. Outside of autos, inventory accumulation also slowed. The 0.1% gain was the weakest since October. It occurred as furniture, home furnishing & appliance inventories fell 1.2% (+3.7% y/y) and apparel (5.1% y/y) and general merchandise inventories (7.4% y/y) both rose just 0.2%.

Factory sector inventories also rose a slower 0.8%, roughly half the January gain. The slowdown was widespread amongst industries and accompanied an easier 1.6% (13.7% y/y) gain in petroleum refineries' inventories. Elsewhere in the nondurable sector, apparel inventories rose a steady 2.0% (22.3% y/y) but textile mill inventories fell 0.2% (+11.6% y/y). Durable goods inventories rose a steady 1.0% (10.5% y/y).

Wholesale inventories rose a steady 1.0% in February with the gain paced by a 9.3% rise in petroleum products (25.3% y/y). Less petroleum wholesale inventories rose a lesser 0.5% but still increased a strong 12.0% y/y as business activity improved.

USECON database. Note that in a value-added feature, the database includes series calculated by Haver database managers showing sales, inventories and I/S ratios for total business less motor vehicle dealers and related wholesale operations.

Business Inventories (%) Feb Jan Dec Feb Y/Y 2010 2009 2008
Total 0.5 1.0 1.1 9.1 8.0 -9.9 0.8
 Retail -0.4 0.3 0.6 5.5 6.1 -10.4 -3.3
   Retail ex Motor Vehicles 0.1 0.4 1.0 4.4 3.6 -4.8 -1.9
 Wholesale 1.0 1.0 1.2 12.7 11.0 -11.8 3.7
 Manufacturing 0.8 1.5 1.4 9.4 7.9 -8.8 -0.8
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