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Economy in Brief

U.S. Business Inventory Accumulation Accelerates
by Tom Moeller   May 13, 2011

The U.S. Commerce Department reported yesterday that business inventories rose 1.0% in March after a revised 0.7% February increase, originally reported as 0.5%. A 0.9% March gain in inventories had been expected by Bloomberg. The faster rate of inventory accumulation was accompanied by an inventory-to-sales ratio which fell to a record low 1.23 as business sales jumped 2.2% (11.0% y/y).

The March pickup in inventory accumulation was led by a 1.1% rise in the factory sector which roughly equaled the February increase. The strength in inventories was widespread amongst inventories. Durable goods inventories rose 1.4% (11.6% y/y) and nondurables rose 0.8% (8.4% y/y). Factory shipments rose 2.7% (9.9% y/y) led by an 8.2% rise (30.1% y/y) in petroleum refineries.

Wholesale inventories rose a steady 1.1% in March and was paced by a 1.0% rise in petroleum products (22.1% y/y). Less petroleum wholesale inventories still rose 1.1% and increased a strong 12.8% y/y as business activity improved. Wholesale sales jumped 2.9% in March led by a 7.9% rise in petroleum (36.0% y/y). Less petroleum sales rose 2.1% (12.2% y/y).

Retail inventories rose 0.9% after a 0.1% February decline. The gain was paced by a 1.2% increase in autos (9.5% y/y). Excluding autos, inventories rose 0.8% (4.5% y/y). Accumulation during the last year was led by a 6.0% rise in apparel, a 5.8% gain in general merchandise, a 3.9% increase in building materials and a 3.6% gain in furniture and appliance inventories. Just-in-time inventory management lowered the retail inventory-to-sales ratio to a record low 1.33. Less autos, the retail I/S ratio fell to a record low 1.19.

The manufacturing and trade data is in Haver's 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 (%) Mar Feb Jan Mar Y/Y 2010 2009 2008
Total 1.0 0.7 1.0 9.7 8.4 -10.0 -0.7
 Retail 0.9 -0.1 0.4 5.9 6.1 -10.0 -4.4
   Retail ex Motor Vehicles 0.8 0.3 0.5 4.5 3.7 -4.7 -3.0
 Wholesale 1.1 1.0 1.0 13.3 11.0 -11.8 3.7
 Manufacturing 1.1 1.0 1.5 10.3 8.3 -8.8 -0.8
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