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Economy in Brief

U.S. Business Inventory Total Rises Marginally; Mixed by Sector
by Carol Stone  September 15, 2015

Total business inventories edged up 0.1% in July (2.6% y/y) after a 0.7% advance in June, revised slightly from 0.8% reported initially. The resulting 3-month growth was 3.0% (AR), down from 5.0% in June. Total business sales also increased 0.1% in July (-2.7% y/y), less than June's 0.3%, which was revised from 0.2% reported before. July's 3-month growth rate was 3.1%, compared to 5.0% in June. The overall inventory/sales ratio was 1.36 in July, the same as in June, which was revised down from 1.37.

Retailers' inventories increased 0.6% in July (3.9% y/y), and June was revised to 1.0% from 0.9%. The 3-month growth was 7.7% through July, marginally larger than June's 7.6%. Total retail excluding motor vehicles saw inventories up 0.2% in July (3.2% y/y), less than June's 0.7%, which was unrevised. The 3-month increase was 5.2% through July, down from 6.1% in June. Motor vehicle dealer inventories rose 1.4% in July (12.8% y/y) after 1.6% in June; their 3-month growth was 12.8% (AR) through July, up from June's 10.6%. General merchandise stores' inventories slowed to a 0.1% rise in July (2.6% y/y) from 0.8% in June. Their 3-month growth was 6.1%, then, down from June's 12.6% pace. Clothing store inventories fell 0.2% in July (5.4% y/y) following a 0.1% uptick in June; their 3-month growth thus slowed to 3.3% from 5.8%. Furniture store inventories slowed to a 0.2% rise (-0.8% y/y) from 0.9% in June; their 3-month growth rate was 2.1%, though, reversing the -3.2% in June. Inventories at building materials and garden supply stores rose 0.6% (5.6% y/y), with 3-month growth at 9.1%.

Merchant wholesalers' inventories edged down 0.1% in July (4.9% y/y) after June's 0.7% increase. Their 3-month growth was 5.1% in July following 7.4% in June. At manufacturers, inventories also fell 0.1% in July (-0.4% y/y), following 0.3% in June; that gave a 1.0% rate of growth over the last 3 months.

As noted above, total business sales also rose 0.1% in July, the same growth as in inventories; they had increased 0.3% in June and their 3-month growth through July was 3.1%. Retail sales (excluding food services) advanced 0.8% in July after falling 0.1% in June; their 3-month growth in July was 8.2%, although, as indicated by Tom Moeller's accompanying report here, they slowed again in August. Merchant wholesalers' sales turned down in July by 0.3% (-4.2% y/y) after a 0.4% rise in June; their 3-month growth thus was a mere 0.9%. Manufacturers' shipments decreased 0.2% (-4.9% y/y) following a 0.6% rise in June; that put their 3-month growth at a 1.1% pace.

The total business inventory-to-sales ratio was 1.36 in July, as noted above, the same as in June, which was revised from 1.37. For retailers, the ratio was 1.46 in July, also the same as in June, which was revised from 1.45. Wholesalers' I/S ratio was flat at 1.30 and manufacturers' at 1.35. For manufacturers and wholesalers, these ratios are distinctly higher than the entire post-recession period through the end of 2014, and for retailers these readings are modestly above those of the 2009-2014 span.

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

Manufacturing & Trade (%) July June May July Y/Y 2014 2013 2012
Business Inventories 0.1 0.7 0.3 2.6 3.8 4.4 5.7
 Retail 0.6 1.0 0.2 3.9 2.7 7.6 7.3
  Retail excl. Motor Vehicles 0.2 0.7 0.3 3.2 2.2 5.0 3.0
 Merchant Wholesalers -0.1 0.7 0.6 4.9 6.7 4.2 6.6
 Manufacturing -0.1 0.3 0.1 -0.4 2.4 1.9 3.8
Business Sales (%)
Total 0.1 0.3 0.4 -2.7 3.4 3.0 5.0
 Retail 0.8 -0.1 1.3 1.9 3.6 3.9 4.8
  Retail excl. Motor Vehicles 0.6 0.4 1.1 0.5 2.5 2.7 3.8
 Merchant Wholesalers -0.3 0.4 0.2 -4.2 4.3 3.1 5.9
 Manufacturing -0.2 0.6 -0.2 -4.9 2.5 2.1 4.4
I/S Ratio
Total 1.36 1.36 1.36 1.29 1.31 1.29 1.27
 Retail 1.46 1.46 1.45 1.43 1.43 1.41 1.38
  Retail Excl. Motor Vehicles 1.27 1.27 1.27 1.23 1.24 1.23 1.21
 Merchant Wholesalers 1.30 1.30 1.29 1.19 1.20 1.18 1.16
 Manufacturing 1.35 1.35 1.35 1.29 1.31 1.30 1.29
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