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Economy in Brief

U.S. Business Inventory Increase is Stable and Firm
by Tom Moeller  April 14, 2014

Total business inventories increased 0.4% in February (4.2% y/y), the same as in January. These gains were accompanied a 0.8% rebound (1.8% y/y) in business sales after January's 1.1% decline. As a result, the inventory-to-sales ratio held at 1.31, the highest level since 2009.

In the retail sector, inventories remained unchanged (5.7% y/y) in February. Retail inventories excluding autos rose 0.2% (3.5% y/y). Inventories of furniture, electronics and appliances jumped 2.8% (-1.1% y/y) and clothing inventories were off 0.7% (+2.3% y/y). Motor vehicle inventories slipped 0.3% (+10.4% y/y) but furniture & home furnishing inventories jumped 2.8% (-1.1% y/y). Building materials inventories ticked 0.1% higher (2.6% y/y). The I/S ratio in the retail sector declined to a still-high 1.45, nearly its highest level since 2009. The nonauto I/S ratio was 1.24 for the third consecutive month, near its highest since early 2011.

Merchant wholesale inventories posted a 0.5% rise (4.7% y/y). That left the I/S ratio at 1.19, up off its least but below the highs of 2012. Nondurable goods distributors inventories ticked 0.1% higher (2.9% y/y). Durable wholesale inventories jumped 0.7% (5.9% y/y). That left the overall wholesale I/S ratio stable at 1.19. Factory sector inventories increased a quickened 0.7% (2.5% y/y) but the I/S ratio was stable at 1.30.

Business sales rebounded 0.8% (1.8% y/y). Merchant wholesale sales gained 0.7% (3.1% y/y) as petroleum sales rebounded 4.0% (6.7% y/y). Retail sales rose a strengthened 0.7% (1.8% y/y) but excluding autos sales gained a lesser 0.3% (0.9% y/y). Shipments from the factory sector rebounded 0.9% (0.9% y/y) and made up January's decline.

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

Updated Budget Projections: 2014 to 2024 from the Congressional Budget Office can be found here.

Manufacturing & Trade (%) Feb Jan Dec Feb Y/Y 2013 2012 2011
Business Inventories 0.4 0.4 0.5 4.2 4.4 5.1 7.9
 Retail 0.0 0.3 0.7 5.7 7.4 7.8 3.9
  Retail excl. Motor Vehicles 0.2 0.5 0.6 3.5 4.5 3.1 3.6
 Merchant Wholesalers 0.5 0.8 0.2 4.7 4.0 5.5 9.2
 Manufacturing 0.7 0.2 0.5 2.5 2.3 2.4 10.2
Business Sales (%)
Total 0.8 -1.1 -0.0 1.8 3.5 4.6 10.9
 Retail 0.7 -0.7 -0.2 1.6 4.4 5.1 7.7
  Retail excl. Motor Vehicles 0.3 -0.2 0.3 2.3 3.2 4.5 7.1
 Merchant Wholesalers 0.7 -1.8 0.4 3.1 4.3 4.8 12.4
 Manufacturing 0.9 -0.7 -0.3 0.8 2.0 4.0 12.1
I/S Ratio
Total 1.31 1.31 1.29 1.28 1.29 1.29 1.27
 Retail 1.45 1.46 1.45 1.40 1.41 1.38 1.36
  Retail Excl. Motor Vehicles 1.24 1.24 1.24 1.21 1.22 1.21 1.23
 Merchant Wholesalers 1.19 1.19 1.16 1.17 1.17 1.18 1.15
 Manufacturing 1.30 1.30 1.29 1.28 1.29 1.29 1.29
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