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Economy in Brief

U.S. Business Inventories and Sales Continue Upward
by Tom Moeller  August 13, 2014

Total business inventories increased 0.4% in June (5.8% y/y) after an unrevised 0.5% May advance. Increases in inventories during Q2'14 picked up versus the first quarter and added 1.6 percentage points to real GDP growth. That  followed subtractions during the prior two quarters.

Retail inventories increased 0.5% (5.9% y/y) after a 0.2% May rise. Auto inventories continued firm, rising 0.9% (10.9% y/y). Nonauto inventories increased 0.3% (3.7% y/y), the firmest gain since February. Furniture, electronics & appliances inventories rebounded 0.6% (6.1% y/y) and building materials inventories rose 0.5% (2.3% y/y). Inventories at clothing & accessory stores ticked 0.1% higher (2.5% y/y) and general merchandise store inventories gained 0.2% (3.2% y/y). Food & beverage store inventories were unchanged (2.6% y/y).

Factory sector inventories gained 0.3% (4.0% y/y) reflecting a 0.4% increase (5.8% y/y) in durables and a 0.1% uptick (1.4% y/y) in nondurables. The 0.3% advance (7.9% y/y) in wholesale inventories reflected a 0.7% gain (8.8% y/y) in durables. Nondurables inventories fell 0.2% (+6.4% y/y), down for the second straight month.

The latest inventory gains were accompanied by another 0.3% increase (4.6% y/y) in business sales. Merchant wholesale sales gained 0.2% (6.5% y/y). Retail sales increased a lessened 0.2% (4.0% y/y) and excluding autos sales gained  0.4% (3.3% y/y). Shipments from the factory sector recovered 0.5% (3.8% y/y).

The overall inventory-to-sales ratio remained steady at 1.29, down a bit from the 1.31 January high. The I/S ratio in the wholesale sector was unchanged at 1.17 and in the factory sector it held at 1.31. In the retail sector, the inventory-to-sales ratio ticked up to 1.42 while the nonauto retail ratio remained at 1.22.

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

Manufacturing & Trade (%) Jun May Apr Jun Y/Y 2013 2012 2011
Business Inventories 0.4 0.5 0.6 5.8 4.3 4.9 7.9
 Retail 0.5 0.2 0.5 5.9 7.1 7.4 3.7
  Retail excl. Motor Vehicles 0.3 0.0 0.1 3.7 3.8 3.2 3.5
 Merchant Wholesalers 0.3 0.3 1.0 7.9 4.0 5.5 9.2
 Manufacturing 0.3 0.8 0.5 4.0 2.3 2.4 10.2
Business Sales (%)
Total 0.3 0.3 0.8 4.7 3.4 4.5 10.9
 Retail 0.2 0.4 0.7 4.0 4.3 5.0 7.7
  Retail excl. Motor Vehicles 0.4 0.3 0.7 2.7 3.0 4.0 7.1
 Merchant Wholesalers 0.2 0.7 1.3 6.5 4.3 4.8 12.4
 Manufacturing 0.5 -0.1 0.4 3.8 2.0 4.0 12.1
I/S Ratio
Total 1.29 1.29 1.29 1.28 1.28 1.28 1.26
 Retail 1.42 1.41 1.41 1.39 1.40 1.38 1.36
  Retail Excl. Motor Vehicles 1.22 1.22 1.23 1.22 1.22 1.21 1.23
 Merchant Wholesalers 1.17 1.17 1.18 1.16 1.17 1.18 1.15
 Manufacturing 1.31 1.31 1.30 1.30 1.29 1.29 1.29
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