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Economy in Brief

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

Total business inventories increased 0.6% (5.1% y/y) during October following two months of 0.5% gain. Total business sales rose a steady 0.3% (8.0% y/y). The inventory-to-sales ratio increased minimally to 1.35, but remained below its 1.43 peak early in 2016.

Retail inventories strengthened 0.8% (3.9% y/y) in October, following a 0.1% uptick. Auto inventories improved 1.1% (8.0% y/y) after a 0.5% rise. Non-auto retail inventories gained 0.7% (1.7% y/y) after two months of slight decline. General merchandise inventories increased 0.8% (1.2% y/y) after a 0.2% decline. In the department store sector, inventories improved 0.4% (-0.8% y/y), the same as in September. Building materials inventories gained 0.3% (7.0% y/y) after a 0.1% uptick, while clothing store inventories surged 1.0% (0.1% y/y) after a 0.1% slip. Inventories of furniture, electronics and appliances strengthened 2.8% (3.8% y/y) after two months of 0.8% increase. As reported earlier, wholesale inventories rose 0.8% (5.2% y/y) following a 0.7% increase. Factory sector inventories gained 0.1% (4.8% y/y) after a 0.6% improvement.

Retail sales increased 1.2% (6.0% y/y) during October following little change in the prior two months. Non-auto sales rose 1.1% (5.8% y/y), also following two months of little-change. Wholesale sector sales fell 0.2% (+9.5% y/y) after a 0.1% uptick. Shipments from the factory sector eased 0.1% (+8.3% y/y) following two months of 0.7% gain.

The overall business inventory-to-sales (I/S) ratio rose to 1.35 in October. 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 rose to 1.28, the highest level since March. The manufacturing sector I/S ratio held steady at 1.34 and remained near the three-year low.

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

Manufacturing & Trade Oct Sep Aug Oct Y/Y 2017 2016 2015
Business Inventories (% chg) 0.6 0.5 0.5 5.1 3.5 1.8 1.7
 Retail 0.8 0.1 0.6 3.9 2.4 4.1 4.9
  Retail excl. Motor Vehicles 0.7 -0.1 -0.1 1.7 2.3 1.9 3.9
 Merchant Wholesalers 0.8 0.7 0.9 6.9 3.6 2.2 1.2
 Manufacturing 0.1 0.6 0.1 4.8 4.5 -0.7 -0.8
Business Sales (% chg)
Total 0.3 0.3 0.5 8.0 5.4 -0.6 -3.4
 Retail 1.2 -0.0 -0.1 6.0 4.5 2.8 1.9
  Retail excl. Motor Vehicles 1.1 -0.0 0.1 5.8 4.9 2.0 0.4
 Merchant Wholesalers -0.2 0.1 0.7 9.5 7.0 -1.3 -4.9
 Manufacturing -0.1 0.7 0.7 8.3 4.7 -3.0 -6.3
I/S Ratio
Total 1.35 1.34 1.34 1.36 1.38 1.42 1.39
 Retail 1.44 1.44 1.44 1.45 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.18 1.18 1.18 1.23 1.24 1.28 1.27
 Merchant Wholesalers 1.28 1.27 1.26 1.28 1.29 1.35 1.33
 Manufacturing 1.34 1.34 1.34 1.37 1.37 1.41 1.39
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