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Economy in Brief

U.S. Business Inventories Rise in April as Sales Decline
by Gerald D. Cohen  June 14, 2019

Total business inventories increased 0.5% (5.3% year-on-year) during April, after being unchanged in March (unrevised). Total business sales decreased 0.2% (+2.8% y/y) following a 1.3% gain (revised down from 1.6%). The inventory-to-sales (I/S) ratio ticked up to 1.39 from an upwardly-revised 1.38. Business inventory swings can have a meaningful impact on GDP. In the first quarter inventories added 0.6 percentage point to GDP growth.

Retail inventories increased 0.5% (4.6% y/y) in April after declining 0.3%. Auto inventories, which comprise roughly 35% of retail inventories, grew 0.8% (8.2% y/y). Non-auto retail inventories rose 0.4% (2.6% y/y). General merchandise inventories, the second largest sector were unchanged (+0.1% y/y). The troubled department store sector – a subset of general merchandise – saw inventories down 1.4% (-7.7% y/y). Factory sector inventories gained 0.3% (3.8% y/y). As reported last week, wholesale inventories were up 0.8% (7.6% y/y).

Retail sales increased an upwardly-revised 0.3% in April (was -0.2%) and 3.5% y/y, with non-auto sales growing 0.5% (3.6% y/y). Note: the advanced retail sales data for May was released today showing a 0.5% gain (3.1% y/y). Wholesale sector sales declined 0.4% in April (+2.7% y/y), while shipments from the factory sector were down 0.5% (+2.2% y/y).

The inventory-to-sales ratio in the retail sector was unchanged at 1.45. The non-auto I/S ratio ticked up down to 1.19, slightly above the historic low of 1.17 reached in November 2018 (data goes back to 1967). The wholesale and factory sector I/S ratios edged up to 1.34 and 1.37 respectively.

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

Manufacturing & Trade Apr Mar Feb Y/Y 2018 2017 2016
Business Inventories (% chg) 0.53 0.05 0.29 5.30 4.92 3.37 1.70
  Retail 0.53 -0.26 0.16 4.61 4.22 2.36 4.10
    Retail excl. Motor Vehicles 0.39 -0.05 0.38 2.60 1.25 2.16 1.95
  Merchant Wholesalers 0.82 -0.02 0.41 7.63 7.14 3.26 1.90
  Manufacturing 0.26 0.41 0.31 3.78 3.52 4.46 -0.71
Business Sales (% chg)
Total -0.23 1.27 0.11 2.77 6.09 5.57 -0.80
  Retail 0.29 1.87 -0.36 3.49 4.72 4.96 2.55
    Retail excl. Motor Vehicles 0.52 1.46 -0.41 3.64 5.35 4.97 2.01
  Merchant Wholesalers -0.40 1.82 0.31 2.73 6.54 6.72 -1.30
  Manufacturing -0.53 0.19 0.34 2.18 6.89 4.98 -3.17
I/S Ratio
Total 1.39 1.38 1.39 1.36 1.36 1.38 1.42
  Retail 1.45 1.45 1.48 1.44 1.44 1.47 1.49
    Retail excl. Motor Vehicles 1.19 1.20 1.21 1.21 1.20 1.24 1.28
  Merchant Wholesalers 1.34 1.33 1.35 1.28 1.29 1.30 1.35
  Manufacturing 1.37 1.36 1.36 1.35 1.35 1.37 1.41
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