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Economy in Brief

U.S. Business Inventories Decline Led by Retailers
by Tom Moeller  February 14, 2019

Total business inventories slipped 0.1% (+4.6% y/y) during November following an unrevised 0.6% October gain. Total business sales fell 0.3% (+4.2% y/y). The inventory-to-sales ratio held steady at 1.35 and remained below its 1.43 peak early in 2016.

Retail inventories declined 0.4% (+3.3% y/y) in November, following a 0.8% rise. Auto inventories improved 0.5% (8.6% y/y) after a 1.1% jump. Non-auto retail inventories declined 1.0% (+0.4% y/y) after a 0.6% rise. General merchandise inventories weakened 1.7% (-0.6% y/y) after a 0.9% rise. In the department store sector, inventories dropped 5.2% (-5.5% y/y) after two months of 0.4% increase. Building materials inventories held steady (6.6% y/y) after a 0.3% rise, while clothing store inventories fell 1.0% (-0.8% y/y) after a 0.9% rise. Inventories of furniture, electronics and appliances declined 4.8% (-1.2% y/y) and reversed three months of increase. As reported earlier, wholesale inventories rose 0.3% (6.9% y/y) following a 0.9% increase. Factory sector inventories eased 0.1% (+4.2% y/y) after a 0.2% improvement.

Retail sales increased 0.2% (4.0% y/y) during November following a 1.0% rise. Non-auto sales were fairly steady (4.7% y/y), following a 0.8% rise. Wholesale sector sales fell 0.6% (+4.0% y/y) for a second straight month. Shipments from the factory sector declined 0.6% (+4.5% y/y), down for the second straight month.

The overall business inventory-to-sales (I/S) ratio held at 1.35 in November. The retail sector ratio eased to 1.43 and remained down sharply from the levels averaged during the prior two years. The non-auto I/S ratio fell to 1.17, its lowest level since early-2012. The ratio peaked at 1.29 early in 2016. The wholesale sector I/S ratio rose to 1.29, the highest level since March. The manufacturing sector I/S ratio increased to 1.35 but remained near the three-year low.

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

Manufacturing & Trade Nov Oct Sep Nov Y/Y 2017 2016 2015
Business Inventories (% chg) -0.1 0.6 0.5 4.6 3.5 1.8 1.7
 Retail -0.4 0.8 0.1 3.3 2.4 4.1 4.9
  Retail excl. Motor Vehicles -1.0 0.6 -0.1 0.4 2.3 1.9 3.9
 Merchant Wholesalers 0.3 0.9 0.7 6.9 3.6 2.2 1.2
 Manufacturing -0.1 0.2 0.6 4.2 4.5 -0.7 -0.8
Business Sales (% chg)
Total -0.3 0.1 0.3 4.2 5.8 -0.8 -3.4
 Retail 0.2 1.1 -0.0 4.0 4.9 2.5 1.9
  Retail excl. Motor Vehicles -0.0 0.8 -0.3 4.7 4.7 2.5 .4
 Merchant Wholesalers -0.6 -0.6 0.1 4.0 7.4 -1.3 -4.9
 Manufacturing -0.6  -0.1 0.7 4.5 5.0 -3.2 -6.2
I/S Ratio
Total 1.35 1.35 1.34 1.35 1.38 1.42 1.39
 Retail 1.43 1.44 1.44 1.44 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.17 1.18 1.18 1.22 1.24 1.28 1.27
 Merchant Wholesalers 1.29 1.28 1.27 1.26 1.30 1.35 1.33
 Manufacturing 1.35 1.34 1.34 1.35 1.37 1.41 1.39
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