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Economy in Brief

U.S. Business Inventory Accumulation Continues As I/S Ratio Ticks Up
by Tom Moeller   July 14, 2011

The U.S. Commerce Department reported that business inventories rose 1.0% in May after a revised 1.0% April increase, originally reported as 0.8%. Quicker inventory accumulation raised the inventory-to-sales ratio to 1.28, up from the low of 1.25 as business sales slipped 0.1% (11.6% y/y).

The May pickup in inventory accumulation was led by a 1.8% rise in the wholesale sector. Year-to-year strength was led by the auto (10.2%) and petroleum (36.3%) sectors. Factory inventories rose 0.8% though the I/S ratio fell.

Retail inventories rose 0.4% after the downwardly revised 0.2% April rise. A 1.0% increase (6.4% y/y) in clothing led the advance while autos rose 0.7% (10.5% y/y). Excluding autos only, inventories increased 0.3% (4.4% y/y). For general merchandise, inventories rose 0.5% (5.8% y/y) while furniture and appliance inventories fell 0.5% (+0.6% y/y).

Despite just-in-time inventory management, the overall inventory-to-sales ratio rose to 1.28. The increase was led by the retail and wholesale sectors. However, less autos the retail I/S ratio remained at its record low of 1.19. For wholesalers, the rise also reflected the auto sector as well as petroleum.

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 (%) May Apr Mar May Y/Y 2010 2009 2008
Total 1.0 1.0 1.3 11.6 8.6 -9.3 -1.2
  Retail 0.4 0.2 1.0 6.0 6.1 -10.0 -4.4
    Retail excl. Motor Vehicles 0.3 0.2 1.0 4.4 3.7 -4.7 -3.0
  Merchant Wholesalers 1.8 1.1 1.3 15.5 11.0 -11.8 3.7
  Manufacturing 0.8 1.5 1.4 13.3 8.7 -6.8 -4.1
Business Sales (%)

Total -0.1 0.1 2.4 11.6 9.3 -14.6 2.3
  Retail -0.2 0.3 0.7 8.1 6.8 -7.8 -1.6
    Retail excl. Motor Vehicles 0.1 0.5 1.2 8.4 6.1 -6.3 2.1
  Merchant Wholesalers -0.2 0.5 3.0 14.5 12.6 -16.1 5.9
  Manufacturing 0.1 -0.4 3.1 11.9 8.6 -18.5 2.3
I/S Ratio
Total 1.28 1.27 1.25 1.28 1.28 1.39 1.32
  Retail 1.34 1.33 1.33 1.37 1.37 1.46 1.51
    Retail Excl. Motor Vehicles 1.19 1.19 1.19 1.24 1.23 1.30 1.29
  Merchant Wholesalers 1.16 1.14 1.13 1.15 1.16 1.30 1.21
  Manufacturing 1.32 1.33 1.23 1.31 1.33 1.41 1.27
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