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Economy in Brief

U.S. Business Inventory Accumulation Rate Moderates
by Tom Moeller  February 14, 2013

Inventories are not sitting for long on businesses' shelves. Business inventories rose 0.1% (5.5% y/y) during December following a downwardly revised 0.2% November increase. That was the slowest monthly rise in six months. It lowered the gain for all of last year to 5.1%, the slowest increase of the economic recovery. Overall, the inventory-to-sales ratio has fluctuated around 1.27 for three years.

Merchant wholesalers have been in forefront of the effort to keep inventories low. The 5.5% rate of increase last year was roughly half that of the prior two years. The restraint is seen in both durable and nondurable goods. That was enough to leave the inventory-to-sales ratio at 1.19, about what it averaged in 2010. Factory sector inventory accumulation also has been muted. Last year's 2.4% growth compared to 9.4% in 2011. It left the inventory-to-sales ratio at a stable 1.27.

In the retail sector, inventories were firm and gained 8.0% during all of last year. Motor vehicle inventories led the growth and increased 20.5% y/y. Excluding autos, however, inventories rose a moderate 3.2% y/y. Clothing stores raised inventory levels by 5.9% in 2012, down from the 7.6% rise in 2011. Inventories of furniture rose 3.9% y/y making up for decumulation in 2011. At general merchandise stores, inventories rose just 2.2% y/y, half the 2011 rate of gain. The rate of inventory growth at food & beverage stores also slowed to 2.6%, half the growth in 2011. Still in an aggressive mode was inventory accumulation of building materials, up 4.4% last year after a 0.9% rise in 2011. The retail inventory-to-sales ratio of 1.38 is up slightly from its low.

Business sales rose 0.3% in December, 4.3% y/y. Wholesale sales were unchanged (4.8% y/y) but that was down sharply from gains during the prior two years. Factory shipments gained 0.4% (3.0% y/y) following two months of 0.3% rise. As reported earlier, retail sales rose 0.4% (4.4% y/y) for the second month. Excluding autos, sales gained  0.2% (3.7% y/y) and made up for the November decline.

The manufacturing and trade data are in Haver's USECON database. 

 

Business Inventories(%) Dec Nov Oct Dec Y/Y 2012 2011 2010
Total 0.1 0.2 0.3 5.1 5.1 7.7 8.3
 Retail 0.5 0.3 0.6 8.0 8.0 3.7 6.1
  Retail excl. Motor Vehicles 0.3 0.3 0.4 3.2 3.2 3.6 3.9
 Merchant Wholesalers -0.1 0.4 0.3 5.5 5.5 9.9 10.1
 Manufacturing 0.1 -0.0 -0.0 2.4 2.4 9.4 8.8
Business Sales (%)
Total 0.3 0.9 -0.3 3.6 4.5 11.3 9.7
 Retail 0.4 0.4 -0.2 4.4 4.8 8.3 5.8
  Retail excl. Motor Vehicles 0.2 -0.2 0.1 3.7 4.1 7.6 4.7
 Merchant Wholesalers 0.0 2.2 -0.9 3.7 4.8 13.5 11.6
 Manufacturing 0.4 0.3 0.3 3.0 4.1 11.8 11.2
I/S Ratio
Total 1.27 1.28 1.28 1.26 1.27 1.26 1.27
 Retail 1.38 1.38 1.38 1.33 1.36 1.34 1.38
  Retail Excl. Motor Vehicles 1.20 1.19 1.19 1.20 1.20 1.21 1.24
 Merchant Wholesalers 1.19 1.19 1.21 1.17 1.19 1.16 1.18
 Manufacturing 1.27 1.27 1.28 1.28 1.28 1.27 1.28
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