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Economy in Brief

U.S. Business Inventory Accumulation Picks Up
by Tom Moeller  September 14, 2018

Total business inventories increased 0.6% (4.3% y/y) during July following a 0.1% June rise. It was the strongest increase since February. Total business sales increased 0.2% (8.1% y/y), following a 0.3% gain. The inventory-to-sales ratio rose to 1.34 from 1.33. It peaked early in 2016 at 1.43.

Retail inventories increased 0.5% (2.3% y/y) in July, following a 0.1% dip. Auto inventories jumped 1.2% (2.8% y/y) after a 0.1% easing. Non-auto retail inventories increased 0.1% (2.0% y/y) following a 0.1% slip. General merchandise inventories rose 0.3% (0.2% y/y) after a 0.4% fall. In the department store sector, inventories declined 0.6% (-3.0% y/y) following a 0.7% fall. Building materials inventories rose 0.7% (7.4% y/y) after a 1.4% jump, but clothing store inventories fell 0.2% (-0.8% y/y), down for the fifth straight month. Inventories of furniture, electronics and appliances recovered 1.2% (-0.9% y/y) after declining for five of six months this year. As reported earlier, wholesale inventories rose 0.6% (5.0% y/y) following a 0.1% rise. Factory sector inventories surged 0.8% (5.6% y/y) following two months of 0.2% gain.

Retail sales rose 0.5% (6.2% y/y) in July after a 0.1% improvement. Non-auto sales strengthened 0.7% (7.2% y/y) after a 0.1% gain. Wholesale sector sales eased (+9.8% y/y) for a second straight month. Shipments from the factory sector held steady (8.1% y/y) following two months of strong growth.

As the overall business inventory-to-sales (I/S) ratio rose to 1.34 in July, the retail sector ratio held steady at 1.43, down sharply from the levels averaged during the prior two years. The non-auto I/S ratio also was steady at 1.19, its lowest level since early-2012. The ratio peaked at 1.29 early in 2016. The wholesale sector I/S ratio rose slightly to 1.26. The manufacturing sector I/S ratio inched higher to 1.35, but remained near the three-year low.

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

Manufacturing & Trade Jul Jun May Jul Y/Y 2017 2016 2015
Business Inventories (% chg) 0.6 0.1 0.3 4.3 3.5 1.8 1.7
 Retail 0.5 -0.1 0.4 2.3 2.4 4.1 4.9
  Retail excl. Motor Vehicles 0.1 -0.1 0.1 2.0 2.3 1.9 3.9
 Merchant Wholesalers 0.6 0.1 0.3 5.0 3.6 2.2 1.2
 Manufacturing 0.8 0.2 0.2 5.6 4.5 -0.7 -0.8
Business Sales (% chg)
Total 0.2 0.3 1.3 8.1 5.8 -0.8 -3.4
 Retail 0.5 0.1 1.0 6.2 4.9 2.5 1.9
  Retail excl. Motor Vehicles 0.7 0.1 1.2 7.2 4.9 2.0 0.4
 Merchant Wholesalers -0.0 -0.2 2.1 9.8 7.4 -1.3 -4.9
 Manufacturing 0.0 1.0 0.6 8.1 5.0 -3.2 -6.2
I/S Ratio
Total 1.34 1.33 1.34 1.39 1.38 1.42 1.39
 Retail 1.43 1.43 1.43 1.48 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.19 1.19 1.20 1.25 1.24 1.28 1.27
 Merchant Wholesalers 1.26 1.25 1.25 1.32 1.29 1.35 1.33
 Manufacturing 1.35 1.34 1.35 1.38 1.37 1.41 1.39
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