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Economy in Brief

U.S. Business Inventory Accumulation Continues But I/S Ratio At Record Low
by Tom Moeller   June 14, 2011

The U.S. Commerce Department reported that business inventories rose 0.8% in April after a revised 1.3% March increase, originally reported as 1.0%. Quick inventory accumulation nevertheless left the inventory-to-sales ratio of 1.26 near its record low. Business sales rose 0.1% (11.0% y/y) after a 2.4% March jump.

The April pickup in inventory accumulation was led by a 1.3% rise in the factory sector which roughly equaled the March and February increases. The strength in inventories was widespread amongst inventories. Durable goods inventories rose 0.9% (12.7% y/y) and nondurables rose 1.9% (11.7% y/y). Petroleum refinery inventories rose 0.7% (35.6% y/y). Factory shipments slipped 0.2% (+10.9% y/y)

Retail inventories rose 0.8% after the upwardly revised 1.0% March jump. Auto inventories rose 0.3% (9.7% y/y). Excluding autos, inventories ticked up 0.1% (4.3% y/y). Accumulation during the last year was led by a 5.8% rise in apparel, a 5.3% gain in general merchandise, a 3.5% increase in building materials and a 2.8% 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.

Wholesale inventories rose a still-strong 0.8% in April and the gain was paced by a 3.7% rise in petroleum products (21.1% y/y). Less petroleum wholesale inventories rose 0.6% and increased a strong 13.4% y/y as business activity improved. Wholesale sales rose 0.3% in April after the 3.0% March jump with higher oil prices. Less petroleum, sales slipped 0.1% (+10.7% y/y).

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 (%) Apr Mar Feb Apr Y/Y 2010 2009 2008
Total 0.8 1.3 0.7 10.6 8.6 -9.3 -1.2
 Retail 0.1 1.0 -0.1 5.7 6.1 -10.0 -4.4
   Retail ex Motor Vehicles 0.1 1.0 0.3 4.3 3.7 -4.7 -3.0
 Wholesale 0.8 1.3 1.0 13.8 11.0 -11.8 3.7
 Manufacturing 1.3 1.4 1.2 12.3 8.7 -6.8 -4.1
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