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Economy in Brief

U.S. Business Inventory Accumulation Eases
by Tom Moeller  October 15, 2018

Total business inventories increased 0.5% (4.2% y/y) during August following a 0.7% July rise, revised from 0.6%. Total business sales increased 0.5% (7.8% y/y), following a 0.2% gain. The inventory-to-sales ratio held steady at 1.34. It peaked early in 2016 at 1.43.

Retail inventories increased 0.7% (2.2% y/y) in August, following a 0.6% gain. Auto inventories jumped 1.8% (3.4% y/y) after a 1.4% rise. Non-auto retail inventories held steady (1.5% y/y) following little change during the prior three months. General merchandise inventories edged 0.1% higher (0.3% y/y) after a 0.4% increase. In the department store sector, inventories declined 0.2% (-2.8% y/y), down for the third straight month. Building materials inventories rose 0.5% (7.9% y/y) after a 0.6% rise, but clothing store inventories improved just 0.1% (-0.4% y/y). Inventories of furniture, electronics and appliances strengthened 0.8% (0.0% y/y) after a 1.3% rise. As reported earlier, wholesale inventories rose 1.0% (5.3% y/y) following a 0.6% rise. Factory sector inventories slipped 0.1% (+5.1% y/y) after a 0.9% jump.

Retail sales  held steady (6.1% y/y) in August after a 0.5% improvement. Non-auto sales rose 0.2% (6.5% y/y) after a 0.7% gain. Wholesale sector sales improved 0.8% (9.2% y/y) following a 0.2% rise. Shipments from the factory sector strengthened 0.5% (7.8% y/y) after no change in July.

As the overall business inventory-to-sales (I/S) ratio held at 1.34 in August, the retail sector ratio inched higher to 1.44, but remained 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 also was unchanged m/m at 1.26. The manufacturing sector I/S ratio slipped to 1.34 and remained near the three-year low.

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

Manufacturing & Trade Aug Jul Jun Aug Y/Y 2017 2016 2015
Business Inventories (% chg) 0.5 0.7 0.1 4.2 3.5 1.8 1.7
 Retail 0.7 0.6 -0.1 2.2 2.4 4.1 4.9
  Retail excl. Motor Vehicles 0.0 0.1 -0.1 1.5 2.3 1.9 3.9
 Merchant Wholesalers 1.0 0.6 0.1 5.3 3.6 2.2 1.2
 Manufacturing -0.1 0.9 0.2 5.6 4.5 -0.7 -0.8
Business Sales (% chg)
Total 0.5 0.2 0.3 7.8 5.8 -0.8 -3.4
 Retail 0.0 0.5 0.1 6.1 4.9 2.5 1.9
  Retail excl. Motor Vehicles 0.2 0.7 0.1 6.5 4.9 2.0 0.4
 Merchant Wholesalers 0.8 0.2 -0.2 9.2 7.4 -1.3 -4.9
 Manufacturing 0.5 0.0 1.0 7.8 5.0 -3.2 -6.2
I/S Ratio
Total 1.34 1.34 1.33 1.39 1.38 1.42 1.39
 Retail 1.44 1.43 1.43 1.49 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.19 1.19 1.19 1.24 1.24 1.28 1.27
 Merchant Wholesalers 1.26 1.26 1.25 1.30 1.29 1.35 1.33
 Manufacturing 1.34 1.35 1.34 1.37 1.37 1.41 1.39
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