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Economy in Brief

U.S. Business Sales Jumped While Inventories Slowed in December
by Sandy Batten  February 15, 2017

Business sales jumped 2.0% m/m (5.2% y/y) in December. This was the largest monthly increase since March 2011 and the largest yearly increase since May 2012. All three major categories (retail, wholesale and manufacturing) posted solid gains with yearly increases in each category the largest since early 2012. However, for all of 2016, total sales edged up only 0.1%, reflecting a 2.7% annual increase in retail sales but declines in both wholesale and manufacturing sales.

Total business inventories rose 0.4% m/m (2.0% y/y) in December, down from the 0.8% m/m increase reported for November. The December increase was generally in line with market expectations. For all of 2016, business inventories rose 2.0%, up from a 1.3% gain in all of 2015. Retail inventories jumped 3.5% in 2016 and wholesale inventories were up 2.6%, while manufacturing inventories were little changed.

For December, retail inventories edged up 0.1% m/m (3.5% y/y) but when autos were excluded rose a more significant 0.4% m/m (1.4% y/y) gain. This reflected a 0.6% m/m decline in auto inventories (but auto inventories were up 7.6% from year ago). Inventories of building materials increased 0.3% m/m in December while inventories at food and beverage stores jumped 0.8% m/m. Wholesale inventories rose 1.0% m/m (2.6% y/y) in December, the same increase as in November. And manufacturing inventories nudged up just 0.1% (-0.1% y/y) following a 0.5% m/m jump in November.

With the jump in sales relative to inventories in December, inventory-to-sales ratios declined across the board. The overall ratio fell to 1.35 from 1.38 in November. This is the lowest reading on this measure since December 2014. The retail inventory-to-sales ratio edged down to 1.47 from 1.48. The wholesale I/S ratio continued its rather steady decline over the past year, falling to 1.29 - its lowest reading since December 2014. And the manufacturing I/S ratio dropped to 1.31 in December, its lowest reading since September 2014 and its biggest monthly decline since November 2013.

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

Manufacturing & Trade Dec Nov Oct Dec Y/Y 2016 2015 2014
Business Inventories (% chg) 0.4 0.8 -0.1 2.0 2.0 1.3 3.7
 Retail 0.1 0.9 -0.4 3.5 3.5 5.3 3.0
  Retail excl. Motor Vehicles 0.4 0.5 -0.2 1.4 1.4 4.1 2.6
 Merchant Wholesalers 1.0 1.0 -0.1 2.6 2.6 1.7 6.5
 Manufacturing 0.1 0.5 0.1 -0.1 -0.1 -2.6 1.8
Business Sales (% chg)
Total 2.0 0.3 0.7 5.2 0.1 -2.7 2.8
 Retail 1.2 0.0 0.8 4.6 2.7 1.6 3.9
  Retail excl. Motor Vehicles 0.6 0.1 0.8 3.8 2.4 0.2 3.2
 Merchant Wholesalers 2.6 0.5 1.1 6.8 -0.2 -4.3 3.6
 Manufacturing 2.2 0.3 0.2 4.3 -1.8 -4.4 1.2
I/S Ratio
Total 1.35 1.38 1.37 1.40 1.39 1.38 1.31
 Retail 1.47 1.48 1.47 1.48 1.49 1.46 1.43
  Retail excl. Motor Vehicles 1.25 1.26 1.25 1.28 1.27 1.27 1.24
 Merchant Wholesalers 1.29 1.31 1.31 1.35 1.34 1.32 1.21
 Manufacturing 1.31 1.34 1.34 1.37 1.35 1.36 1.31
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