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Economy in Brief

U.S. Business Inventories Jumped While Sales Sputtered in November
by Sandy Batten  January 13, 2017

Total business inventories increased 0.7% m/m (1.5% y/y) in November following a 0.1% m/m decline (originally reported as -0.2% m/m) in October. This rise was generally in line with market expectations, which looked for a 0.6% m/m increase. In contrast, business sales edged up 0.1% m/m (2.3% y/y) in November versus a 0.7% m/m increased (revised from +0.8% m/m) in October.

New data in this report showed that retail inventories surged 1.0% m/m (4.0% y/y) in November after having declined 0.4% m/m (not revised) in October and being unchanged in September. The November jump was the largest monthly gain since September 2015 and was led by gains in inventories of motor vehicles and parts (+1.9% m/m), and of building materials (1.2% m/m). Wholesale inventories also posted a 1.0% m/m (1.4% y/y) increase in November with the initially reported 0.4% m/m decline for October revised up to a 0.1% m/m decrease. Factory inventories gained 0.2% m/m (-0.7% y/y) in November after a 0.1% m/m rise (revised from unchanged) in October.

The meager increase in business sales in November reflected generally tepid performance across the stages of production. Retail sales were unchanged in November from October. Manufacturing shipments slipped 0.1% m/m. Wholesale sales showed the most life, rising 0.4% m/m in November, but this was down from a 1.1% m/m gain in October.

The overall business inventory-to-sales ratio edged up to 1.38 in November from 1.37 in October, the first rise in 2016 after having trended down throughout last year. The retail I/S ratio also edged up to 1.48 in November from 1.47, as did the ratio excluding autos-to 1.26 from 1.25. The wholesale sector I/S ratio rose to 1.32 from an upwardly revised 1.31 in October, while the manufacturing I/S ratio was unchanged at 1.34, remaining at its lowest level since December 2014.

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

Manufacturing & Trade Nov Oct Sep Nov Y/Y 2015 2014 2013
Business Inventories (% chg) 0.7 -0.1 0.0 1.5 1.3 3.7 3.9
 Retail 1.0 -0.4 0.0 4.0 5.3 3.1 7.4
  Retail excl. Motor Vehicles 0.5 -0.2 -0.1 1.2 4.1 2.6 4.8
 Merchant Wholesalers 1.0 -0.1 0.1 1.4 1.9 6.5 4.0
 Manufacturing 0.2 0.1 -0.1 -0.7 -2.6 1.8 1.0
Business Sales (% chg)
Total 0.1 0.7 0.8 2.3 -2.6 2.8 2.9
 Retail 0.0 0.8 1.0 4.3 1.6 3.9 3.8
  Retail excl. Motor Vehicles 0.1 0.8 0.8 3.5 0.2 3.2 2.6
 Merchant Wholesalers 0.4 1.1 0.4 3.4 -4.3 3.6 3.1
 Manufacturing -0.1 0.2 0.9 0.1 -4.4 1.2 2.1
I/S Ratio
Total 1.38 1.37 1.38 1.39 1.38 1.31 1.29
 Retail 1.48 1.47 1.49 1.48 1.46 1.43 1.41
  Retail excl. Motor Vehicles 1.26 1.25 1.26 1.29 1.27 1.24 1.23
 Merchant Wholesalers 1.32 1.31 1.32 1.34 1.32 1.21 1.18
 Manufacturing 1.34 1.34 1.34 1.35 1.36 1.31 1.30
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