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Economy in Brief

U.S. Business Inventories Slip While Sales Rise
by Carol Stone, CBE  January 16, 2020

A month ago, the headline here was the exact opposite: "Inventories Rise While Sales Slip." So that October condition reversed in November: total business inventories decreased 0.2% (2.8% y/y) after October's 0.1% rise, as November sales rebounded 0.7% (1.0% y/y) after falling 0.2% in October. The inventory-to-sales (I/S) ratio edged down to 1.39 from the 1.40 that had held since May.

Retail inventories dropped 0.8% (2.3% y/y) in November after two modest monthly increases of 0.1%. Motor vehicle dealers' stocks declined 1.8% in November (0.6% y/y) after a 0.7% decrease in October. Nonauto inventories also decreased in November, edging 0.2% lower (3.3% y/y) after October's 0.5% increase. Inventories of furniture & home furnishings fell 0.6% (0.3% y/y) following a jump of 1.2% in October. Clothing inventories edged down 0.2% (unchanged y/y); they have fallen 0.2%-0.3% for the last four months. General merchandise store inventories fell 0.3% (-0.9% y/y) for a second month; that included a 1.6% drop in department store stocks. Wholesale inventories edged down 0.1% (+3.3% y/y), reversing October's 0.1% increase. Factory sector inventories rose 0.3% (2.7% y/y) in November after a 0.2% increase.

Sales of retail stores (not including the food service sector) were up 0.4% in November (3.1% y/y), a second such monthly increase, which was repeated in December. Excluding auto dealers, retail sales edged up just 0.1% (2.1% y/y) in November after a 0.2% rise. Wholesale sector sales gained 1.5% (0.8% y/y), rebounding after their October drop of 0.9%. Shipments from the factory sector increased 0.3% (-0.8% y/y) following their slim 0.1% October rise.

The inventory-to-sales ratio in the retail sector declined to 1.43 in November from 1.45; the 1.43 is the lowest since a similar ratio in May 2015. The ratio for retailers excluding auto dealers was 1.19 for a third consecutive month. That for wholesalers was 1.35, down from 1.37. And among manufacturers, it was 1.40 for a third month.

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

Manufacturing & Trade Nov Oct Sep Nov Y/Y 2018 2017 2016
Business Inventories (% chg) -0.2 0.1 -0.1 2.8 4.9 3.4 1.7
  Retail -0.8 0.1 0.1 2.3 4.2 2.4 4.0
    Retail excl. Motor Vehicles -0.2 0.5 0.2 3.3 1.7 2.0 2.0
  Merchant Wholesalers -0.1 0.1 -0.7 3.3 7.1 3.3 1.9
  Manufacturing 0.3 0.3 0.3 2.7 3.5 4.5 -0.7
Business Sales (% chg)
Total 0.7 -0.2 -0.4 1.0 6.1 5.4 -0.8
  Retail 0.4 0.4 -0.6 3.1 4.6 4.5 2.4
    Retail excl. Motor Vehicles 0.1 0.2 -0.4 2.1 5.3 4.8 1.9
  Merchant Wholesalers 1.5 -0.9 -0.1 0.8 6.5 6.7 -1.3
  Manufacturing 0.3 0.1 -0.4 -0.8 6.9 5.0 -3.2
I/S Ratio
Total 1.39 1.40 1.40 1.37 1.36 1.38 1.42
  Retail 1.43 1.45 1.45 1.44 1.45 1.47 1.49
    Retail excl. Motor Vehicles 1.19 1.19 1.19 1.17 1.20 1.24 1.28
  Merchant Wholesalers 1.35 1.37 1.36 1.32 1.29 1.30 1.35
  Manufacturing 1.40 1.40 1.40 1.35 1.35 1.37 1.41
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