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Economy in Brief

U.S. Business Inventories & Sales Increase
by Tom Moeller  July 16, 2019

Total business inventories rose 0.3% (5.3% y/y) during May following an unrevised 0.5% April gain. Total business sales rose 0.2% (1.5% y/y) following an unrevised 0.2% decline. The inventory-to-sales (I/S) ratio held steady at an unrevised 1.39. Business inventory swings can have a meaningful impact on GDP. In 1Q'19 inventories added 0.6 percentage point to GDP growth following a 0.1 point addition to 4Q'18 growth.

Retail inventories increased 0.4% (4.7% y/y) in May after rising 0.6% during April. Auto inventories, which comprise roughly 35% of retail inventories, grew 0.7% (7.7% y/y). Non-auto retail inventories rose 0.3% (3.0% y/y). General merchandise inventories, the second largest sector fell 0.4% (-0.0% y/y). Department store inventories, a subset of general merchandise, moved 0.3% lower (-8.4% y/y) as clothing & accessory store inventories ticked 0.1% higher (0.8% y/y). Factory sector inventories gained 0.2% (3.6% y/y). As reported last week, wholesale inventories rose 0.4% (7.7% y/y).

Retail sales increased 0.3% in May (2.7% y/y, with non-auto sales growing 0.2% (2.6% y/y). Wholesale sector sales edged 0.1% higher (0.4% y/y), while shipments from the factory sector also rose 0.1% (1.4% y/y).

The inventory-to-sales ratio in the retail sector was unchanged at 1.46. The non-auto I/S ratio also was stable at 1.20, 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 1.35 and 1.38 respectively.

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

Manufacturing & Trade May Apr Mar May Y/Y 2018 2017 2016
Business Inventories (% chg) 0.3 0.5 0.0 5.3 4.9 3.4 1.7
  Retail 0.4 0.6 -0.4 4.7 4.2 2.4 4.0
    Retail excl. Motor Vehicles 0.3 0.5 -0.2 3.0 1.7 2.0 2.0
  Merchant Wholesalers 0.4 0.8 -0.0 7.7 7.1 3.3 1.9
  Manufacturing 0.2 0.2 0.4 3.6 3.5 4.5 -0.7
Business Sales (% chg)
Total 0.2 -0.2 1.3 1.5 6.1 5.4 -0.8
  Retail 0.3 0.3 2.0 2.7 4.6 4.5 2.4
    Retail excl. Motor Vehicles 0.2 0.5 1.5 2.6 5.3 4.8 1.9
  Merchant Wholesalers 0.1 -0.4 1.8 0.4 6.5 6.7 -1.3
  Manufacturing 0.1 -0.6 0.2 1.4 6.9 5.0 -3.2
I/S Ratio
Total 1.39 1.39 1.38 1.34 1.36 1.38 1.42
  Retail 1.46 1.46 1.46 1.44 1.45 1.47 1.49
    Retail excl. Motor Vehicles 1.20 1.20 1.20 1.19 1.20 1.24 1.28
  Merchant Wholesalers 1.35 1.34 1.33 1.26 1.29 1.30 1.35
  Manufacturing 1.38 1.37 1.36 1.35 1.35 1.37 1.41
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