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Economy in Brief

U.S. Business Inventories Increase As Sales Decline
by Tom Moeller  March 11, 2019

Total business inventories rose 0.6% (4.9% y/y) during December after holding steady in November. Total business sales fell 1.0% (+1.9% y/y) following a 0.6% decline. The inventory-to-sales ratio increased to 1.38, its highest level since the middle of 2017.

Retail inventories increased 0.9% (4.0% y/y) in December following a 0.4% decline. Auto inventories improved 0.6% (9.3% y/y) for the second straight month. Non-auto retail inventories rebounded 1.0% (1.1% y/y) and recovered November's decline. General merchandise inventories rebounded 0.9% (-0.1% y/y) after a 2.1% drop. In the department store sector, inventories recovered 1.0% (-5.2% y/y) after tumbling 5.3% in the prior month. Building materials inventories rose 0.9% (7.0% y/y) after a 0.1% uptick, while clothing store inventories rebounded 1.4% (0.6% y/y) following a 0.7% decline. Inventories of furniture, electronics and appliances recovered 0.7% (-1.3% y/y) after dropping 4.6%. As reported earlier, wholesale inventories surged 1.1% (6.9% y/y) following a 0.4% increase. Factory sector inventories were fairly steady (4.2% y/y) after a 0.1% slip.

Retail sales stumbled 1.8% (+0.3% y/y) during December after holding steady. Non-auto sales moved 2.5% lower (-0.2% y/y) after little change. Wholesale sector sales fell 1.0% (+1.2% y/y), about the same as they did in November. Shipments from the factory sector eased 0.2% (+4.3% y/y), down for the third straight month.

The overall business inventory-to-sales (I/S) ratio surged to 1.38. The retail sector ratio jumped to 1.47, its highest point since August of 2017. The non-auto I/S ratio strengthened to 1.21, its highest level since April 2018. The wholesale sector I/S ratio rose to 1.33, the highest level since the middle of 2016. The manufacturing sector I/S ratio held steady at 1.35 and remained near the three-year low.

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

Manufacturing & Trade Dec Nov Oct Dec Y/Y 2018 2017 2016
Business Inventories (% chg) 0.6 -0.0 0.6 4.9 4.9 3.5 1.9
 Retail 0.9 -0.4 0.8 4.0 4.0 2.4 4.1
  Retail excl. Motor Vehicles 1.0 -0.9 0.6 1.1 1.1 2.4 2.1
 Merchant Wholesalers 1.1 0.4 0.9 6.9 7.3 3.6 2.2
 Manufacturing -0.0 -0.1 0.2 4.2 3.5 4.5 -0.7
Business Sales (% chg)
Total -1.0 -0.6 0.1 1.9 6.5 5.4 -0.6
 Retail -1.8 0.0 1.1 0.3 4.8 4.5 2.8
  Retail excl. Motor Vehicles -2.5 -0.0 0.9 -0.2 5.3 4.5 2.2
 Merchant Wholesalers -1.0 -1.2 -0.6 1.2 7.5 7.0 -1.3
 Manufacturing -0.2 -0.5 -0.1 4.3 7.0 4.7 -3.0
I/S Ratio
Total 1.38 1.36 1.35 1.34 1.35 1.38 1.42
 Retail 1.47 1.43 1.44 1.43 1.45 1.48 1.49
  Retail excl. Motor Vehicles 1.21 1.17 1.18 1.21 1.20 1.24 1.28
 Merchant Wholesalers 1.33 1.30 1.28 1.25 1.28 1.30 1.35
 Manufacturing 1.35 1.35 1.34 1.35 1.35 1.38 1.41
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