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Economy in Brief

U.S. Business Inventory Growth Slows in June
by Carol Stone  August 12, 2011

The U.S. Commerce Department reported that business inventory growth slowed in June to 0.3% from 0.9% in May (revised from 1.0%). Business sales increased 0.4% in June, turning back higher following a 0.1% decrease in May. With the moderation in stock growth, the inventory/sales ratio stabilized at 1.28, after rising in both May and April. At end-June, inventories were 11.1% higher than June 2010, and June's sales were up 12.4% from the year ago.

Wholesalers again showed the largest inventory gain among the major distribution sectors, at 0.6%. However, this is much more moderate than the sizable 1.7% in May and the 1% or larger increases in that sector every month beginning last December. The lesser expansion owed mainly to an outright decline in petroleum stocks, which fell 4.0% in June alone. Other nondurable goods inventories edged up 0.2% and durable goods inventories increased 1.3%, with notable advances in motor vehicles, computers, metals and machinery.

In the retail sector, an upturn in sales contributed to a smaller advance in inventories. Sales in June rose 0.4% after a 0.2% decline in May. Retailers' inventories rose just 0.2%, compared with May's 0.4% rise. General merchandise and building material stocks actually fell, while furniture, food and clothing stores all saw moderate increases. Motor vehicle dealers saw a slim 0.1% increase in stocks. Inventory/sales ratios moved little in the sector, up or down 0.01 among store groups, except building materials, whose sales gain cut their I/S ratio by 0.03. However, their sales retreated anew in July so the lower I/S may be temporary.

Manufacturers' inventories were up 0.2% in June, the smallest monthly increase since May 2010. The smaller rise kept the factory I/S ratio at 1.34, the same as the upwardly revised May figure (originally reported as 1.32).

The manufacturing and trade data are 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 (%)

Jun May Apr Mar June Y/Y 2010 2009 2008
Total 0.3 0.9 1.0 1.3 11.1 8.6 -9.3 -1.2
  Retail 0.2 0.4 0.2 1.0 5.0 6.1 -10.0 -4.4
    Retail excl. Motor Vehicles 0.2 0.4 0.2 1.0 4.5 3.7 -4.7 -3.0
  Merchant Wholesalers 0.6 1.7 1.1 1.3 15.8 11.0 -11.8 3.7
  Manufacturing 0.2 0.8 1.5 1.4 12.8 8.7 -6.8 -4.1
Business Sales (%)
Total 0.4 -0.1 0.1 2.4 12.4 9.3 -14.6 2.3
  Retail 0.3 -0.2 0.3 0.7 8.9 6.8 -7.8 -1.6
    Retail excl. Motor Vehicles 0.2 0.2 0.5 1.2 8.4 6.1 -6.3 2.1
  Merchant Wholesalers 0.6 -0.3 0.5 3.0 15.4 12.6 -16.1 5.9
  Manufacturing 0.2 0.0 -0.4 3.1 12.8 8.6 -18.5 2.3
I/S Ratio
Total 1.28 1.28 1.27 1.25 1.29 1.28 1.39 1.32
  Retail 1.34 1.34 1.33 1.33 1.39 1.37 1.46 1.51
    Retail Excl. Motor Vehicles 1.19 1.19 1.19 1.19 1.24 1.23 1.30 1.29
  Merchant Wholesalers 1.16 1.16 1.14 1.13 1.16 1.16 1.30 1.21
  Manufacturing 1.34 1.32 1.33 1.23 1.34 1.33 1.41 1.27
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