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Economy in Brief

U.S. Business Inventory Accumulation Remains Moderate
by Tom Moeller  November 15, 2018

Total business inventories increased 0.3% (4.4% y/y) during September following an unrevised 0.5% August rise. Total business sales increased 0.4% (6.6% y/y) after a 0.5% gain. The inventory-to-sales ratio held steady at 1.34. It peaked early in 2016 at 1.43.

Retail inventories nudged 0.1% higher (3.1% y/y) in September, following two months of 0.6% increase. Auto inventories improved 0.4% (6.2% y/y) following two months of much stronger gain. Non-auto retail inventories eased for a second month (+1.5% y/y). General merchandise inventories also slipped 0.1% (+0.5% y/y) and offset the August rise. In the department store sector, inventories improved 0.3% (-1.7% y/y) after three months of decline. Building materials inventories held steady (6.7% y/y) after a 0.6% fall, while clothing store inventories were off 0.9% (-5.1% y/y). Inventories of furniture, electronics and appliances strengthened 0.7% (-2.6% y/y) after a 1.3% rise. As reported earlier, wholesale inventories rose 0.4% (5.2% y/y) following a 0.9% increase. Factory sector inventories gained 0.5% (4.8% y/y) after a 0.1% improvement.

Retail sales increased 0.2% (3.8% y/y) in September after a 0.1% dip. Non-auto sales also rose 0.2% (5.1% y/y) following a 0.1% gain. Wholesale sector sales improved 0.2% (7.8% y/y) after a 0.7% rise. Shipments from the factory sector strengthened 0.9% (7.9% y/y) following the 0.7% August gain.

The overall business inventory-to-sales (I/S) ratio held at 1.34 in September. The retail sector ratio also held steady at 1.44, but remained down sharply from the levels averaged during the prior two years. The non-auto I/S ratio also was unchanged at 1.18, its lowest level since early-2012. The ratio peaked at 1.29 early in 2016. The wholesale sector I/S ratio also held steady m/m at 1.26 for the third straight month. The manufacturing sector I/S ratio slipped to 1.33 and remained near the three-year low.

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

Manufacturing & Trade Sep Aug Jul Sep Y/Y 2017 2016 2015
Business Inventories (% chg) 0.3 0.5 0.7 4.4 3.5 1.8 1.7
 Retail 0.1 0.6 0.6 3.1 2.4 4.1 4.9
  Retail excl. Motor Vehicles -0.1 -0.1 0.1 1.5 2.3 1.9 3.9
 Merchant Wholesalers 0.4 0.9 0.6 5.2 3.6 2.2 1.2
 Manufacturing 0.5 0.1 0.9 4.8 4.5 -0.7 -0.8
Business Sales (% chg)
Total 0.4 0.5 0.2 6.6 5.8 -0.8 -3.4
 Retail 0.2 -0.1 0.5 3.8 4.9 2.5 1.9
  Retail excl. Motor Vehicles 0.2 0.1 0.7 5.1 4.9 2.0 0.4
 Merchant Wholesalers 0.2 0.7 0.2 7.8 7.4 -1.3 -4.9
 Manufacturing 0.9 0.7 0.0 7.9 5.0 -3.2 -6.2
I/S Ratio
Total 1.34 1.34 1.34 1.35 1.38 1.42 1.39
 Retail 1.44 1.44 1.43 1.45 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.18 1.18 1.19 1.22 1.24 1.28 1.27
 Merchant Wholesalers 1.26 1.26 1.26 1.29 1.29 1.35 1.33
 Manufacturing 1.33 1.34 1.35 1.37 1.37 1.41 1.39
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