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Economy in Brief

U.S. Business Inventories Jump And Raise I/S Ratio
by Tom Moeller  March 13, 2013

All of a sudden, business inventories reversed their prior moderation and jumped in January. Total business inventories surged 1.0% (5.6% y/y) during January following an upwardly revised 0.3% December rise. The latest was the quickest one-month increase since March 2011. The rise was accompanied by a 0.3% dip (+2.9% y/y) in business sales. As a result, the inventory-to-sales ratio rose to 1.21, its highest level since November 2009.

Merchant wholesale inventories jumped 1.2% (6.5% y/y) due to across-the-board industry strength. Nevertheless, the y/y gain was roughly half that of the prior two years. The restraint is seen in both durable and nondurable goods. The inventory-to-sales ratio rose to 1.21, its highest since October 2009. Factory sector inventories rose 0.5% (2.2% y/y), following three months of being roughly unchanged. The inventory-to-sales ratio ticked up to 1.28.

In the retail sector, inventories jumped 1.5% (9.0% y/y). Motor vehicle inventories led the growth with a 20.1% y/y rise. Excluding autos, the rate of inventory accumulation also picked up to 4.5% y/y. General merchandise stores raised inventories by 6.4% y/y while clothing stores increased inventories by 5.6% y/y. Building material stores raised inventories 5.2% y/y. Inventories at food & beverage stores rose 3.3% y/y and furniture store inventories gained 1.1% y/y. The retail inventory-to-sales ratio of 1.40 was its highest since September 2009.

Business sales slipped 0.3% in January (+2.9% y/y). Wholesale sales fell 0.8% (+3.0% y/y). Factory shipments also were down by 0.2% (+1.9% y/y). As reported earlier, retail sales rose 0.3% (4.0% y/y). Excluding autos, sales gained  0.5% (3.1% y/y).

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

Business Inventories(%) Jan Dec Nov Jan Y/Y 2012 2011 2010
Total 1.0 0.3 0.2 5.6 5.2 7.7 8.3
 Retail 1.5 0.8 0.3 9.0 8.4 3.7 6.1
  Retail excl. Motor Vehicles 1.3 0.6 0.3 4.5 3.5 3.6 3.9
 Merchant Wholesalers 1.2 0.1 0.4 6.5 5.7 9.9 10.1
 Manufacturing 0.5 0.0 -0.0 2.2 2.4 9.4 8.8
Business Sales (%)
Total -0.3 0.1 0.9 2.9 4.5 11.3 9.7
 Retail 0.3 0.4 0.4 4.0 4.8 8.3 5.8
  Retail excl. Motor Vehicles 0.5 0.1 -0.2 3.1 4.0 7.6 4.7
 Merchant Wholesalers -0.8 0.0 2.2 3.0 4.8 13.5 11.6
 Manufacturing -0.2 -0.0 0.3 1.9 4.1 11.8 11.2
I/S Ratio
Total 1.29 1.28 1.28 1.26 1.27 1.26 1.27
 Retail 1.40 1.38 1.38 1.33 1.36 1.34 1.38
  Retail Excl. Motor Vehicles 1.21 1.20 1.19 1.19 1.20 1.21 1.24
 Merchant Wholesalers 1.21 1.19 1.19 1.17 1.19 1.16 1.18
 Manufacturing 1.28 1.27 1.27 1.28 1.28 1.27 1.28
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