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Economy in Brief

U.S. Business Inventory Gain Is Steady; Sales Increase Firms
by Tom Moeller  September 12, 2014

Total business inventories increased 0.4% in July (5.9% y/y) after an unrevised 0.4% rise during June. For all of last quarter, faster accumulation of inventories added 1.4 percentage points to real GDP growth after a 1.2 percentage point subtraction in Q1.

Retail inventories jumped 1.0% (6.6% y/y) after a 1.4% rise last quarter. Auto inventories increased 2.3% (13.3% y/y) following a 3.2% Q2 gain. Nonauto inventories increased 0.4% (3.5% y/y), the firmest rise in six months. Building materials inventories rose 0.7% (2.9% y/y) after falling during Q2. General merchandise store inventories gained 0.3% (2.6% y/y) after a 0.2% Q2 decline while food & beverage store inventories also rose 0.3% (2.7% y/y). Furniture & home furnishings inventories gained 0.2% (6.2% y/y) after a 2.4% Q2 jump. Clothing inventories inched 0.1% higher for a second month following a 0.4% gain during Q2.

Factory sector inventories ticked 0.1% higher (3.9% y/y) reflecting a 0.5% increase (5.9% y/y) in durables and a 0.4% decline (+0.8% y/y) in nondurables. The 0.1% uptick (7.9% y/y) in wholesale inventories followed a moderated 1.5% increase last quarter and reflected a 0.3% gain (8.4% y/y) in durables. Nondurables inventories were unchanged (7.0% y/y) following two months of decline.

The latest inventory gains were accompanied by a strengthened 0.8% increase (5.3% y/y) in business sales. Merchant wholesale sales gained 0.7% (7.5% y/y). Retail sales increased a lessened 0.3% (3.9% y/y) and excluding autos sales also gained 0.3% (3.4% y/y). Shipments from the factory sector jumped 1.2% (4.3% y/y), the strongest increase since November.

The overall inventory-to-sales ratio remained at 1.29 for a fifth straight month, down a bit from the 1.31 January high. The I/S ratio in the wholesale sector slipped to 1.16 and in the factory sector it edged down to 1.29. The retail sector inventory-to-sales ratio ticked up to 1.43 while the nonauto retail ratio remained at 1.22 for a third month.

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

Manufacturing & Trade (%) Jul Jun May Jul Y/Y 2013 2012 2011
Business Inventories 0.4 0.4 0.5 5.9 4.3 4.9 7.9
 Retail 1.0 0.7 0.2 6.6 7.1 7.4 3.7
  Retail excl. Motor Vehicles 0.4 0.3 0.0 3.5 3.8 3.2 3.5
 Merchant Wholesalers 0.1 0.2 0.3 7.9 4.0 5.5 9.2
 Manufacturing 0.1 0.2 0.8 3.9 2.3 2.4 10.2
Business Sales (%)
Total 0.8 0.6 0.3 5.3 3.4 4.5 10.9
 Retail 0.6 0.3 0.4 4.8 4.3 5.0 7.7
  Retail excl. Motor Vehicles 0.3 0.5 0.4 4.1 3.0 4.0 7.1
 Merchant Wholesalers 0.7 0.4 0.7 7.5 4.3 4.8 12.4
 Manufacturing 1.2 0.8 -0.1 4.3 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 1.43 1.42 1.41 1.39 1.40 1.38 1.36
  Retail Excl. Motor Vehicles 1.22 1.22 1.22 1.22 1.22 1.21 1.23
 Merchant Wholesalers 1.16 1.17 1.17 1.16 1.17 1.18 1.15
 Manufacturing 1.29 1.30 1.31 1.29 1.29 1.29 1.29
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