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Economy in Brief

U.S. Business Inventories Continue to Post a Firm Increase
by Tom Moeller  March 13, 2014

Total business inventories increased 0.4% in January (3.9% y/y) after a 0.5% December rise. These gains were accompanied a 0.9% decline (+2.5% y/y) in business sales after December's 0.1% slip. As a result, the inventory-to-sales ratio rose to 1.32, the highest level since 2009.

In the retail sector, inventories advanced 0.4% (6.3% y/y) in January. Retail inventories excluding autos rose 0.7% (4.0% y/y). General merchandise inventories jumped 0.9% (3.9% y/y) while clothing inventories gained 0.8% (3.2% y/y). Inventories of building supplies ticked up 0.1% (2.9% y/y). To the downside, motor vehicle inventories slipped 0.1% (+11.4% y/y). Inventories of furniture, electronics and appliances declined 0.7% (-1.3% y/y) and clothing inventories were off 0.8% (+3.2% y/y). The I/S ratio in the retail sector continued upward to 1.46, its highest level since 2009. The nonauto I/S ratio of 1.25 also was its highest since early 201

Merchant wholesale inventories posted a 0.6% rise (3.6% y/y). That left the I/S ratio at 1.20, up off its least but below the highs of early last year. Nondurable goods distributors inventories rebounded 0.8% (1.8% y/y), prompted by a modest 2.1% gain (-8.8% y/y) in petroleum. Durable wholesale inventories rose a lessened 0.4% (4.9% y/y). That left the overall wholesale I/S ratio up a notch at 1.20. Factory sector inventories increased a lessened 0.2% (2.0% y/y) but the I/S ratio was a slightly increased 1.30.

Business sales were weak for the second month. Merchant wholesale sales declined 1.9% (+3.9% y/y). They were pulled lower by a 7.5% drop (+10.0 % y/y) in petroleum sales. Retail sales rose a modest 0.3% (1.3% y/y) but excluding autos, sales were off 0.2% (+1.6% y/y). Shipments from the factory sector fell 0.3% (+1.6% y/y), the same as during December.

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

Business Inventories (%) Jan Dec Nov Jan Y/Y 2013 2012 2011
Total 0.4 0.5 0.4 3.9 4.4 5.1 7.9
 Retail 0.4 0.6 0.8 6.3 7.3 8.0 3.9
  Retail excl. Motor Vehicles 0.7 0.7 0.6 4.0 4.2 3.2 3.6
 Merchant Wholesalers 0.6 0.4 0.5 3.6 4.0 5.5 9.2
 Manufacturing 0.2 0.5 0.1 2.0 2.3 2.4 10.2
Business Sales (%)
Total -0.9 -0.1 0.7 2.5 3.4 4.4 11.0
 Retail 0.3 -0.6 -0.2 1.3 4.3 5.1 7.7
  Retail excl. Motor Vehicles -0.2 0.3 -0.3 1.6 3.3 4.8 7.0
 Merchant Wholesalers -1.9 0.1 1.0 3.9 4.3 4.3 12.8
 Manufacturing -0.3 -0.3 0.8 1.6 2.1 4.0 12.1
I/S Ratio
Total 1.32 1.30 1.29 1.30 1.29 1.29 1.27
 Retail 1.46 1.45 1.44 1.41 1.41 1.38 1.36
  Retail Excl. Motor Vehicles 1.25 1.24 1.23 1.22 1.22 1.21 1.23
 Merchant Wholesalers 1.20 1.18 1.17 1.21 1.19 1.19 1.17
 Manufacturing 1.30 1.29 1.28 1.29 1.29 1.29 1.29
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