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Economy in Brief

U.S. Business Inventories Edge Higher While Sales Ease
by Tom Moeller  February 14, 2020

Total business inventories rose an expected 0.1% (2.2% y/y) during December following an unrevised 0.2% November decline. The expected figure is from the Informa Global Markets survey. At the same time, business sales fell 0.1% (+1.7% y/y) following a 0.5% jump. As a result, the inventory-to-sales ratio rose to 1.40. It has been moving sideways since the end of 2018.

Retail inventories were little changed (1.1% y/y) in December after a 0.9% decline. Motor vehicle dealers' inventories eased 0.1% in December (-0.3% y/y), down for the third straight month. Nonauto inventories held steady (1.9% y/y) after November's 0.3% decrease. Inventories of furniture & home furnishings fell 0.6% (+2.3% y/y) following a 1.0% decline. Clothing inventories were off 0.4% (-1.5% y/y), down for five straight months. General merchandise store inventories fell 0.6% (-0.8% y/y) while department store inventories weakened 2.4% (-7.3% y/y). Wholesale inventories edged 0.2% lower (+2.1% y/y) after two months of 0.1% rise. Factory sector inventories strengthened 0.5% (3.3% y/y) after a 0.3% increase.

Sales of retail stores (not including the food service sector) were unchanged in December (5.4% y/y) after rising 0.3% in November. Excluding auto dealers, retail sales improved 0.5% (6.0% y/y) after easing 0.1%. Wholesale sector sales declined 0.7% (+0.5% y/y) and reversed November's rise. Shipments from the factory sector increased 0.5% (-0.2% y/y) following their 0.3% November rise.

The inventory-to-sales ratio in the retail sector held steady at 1.43 in December, the lowest level since May 2015. The ratio for retailers excluding auto dealers eased to 1.18, down from the March 2016 high of 1.29. For merchant wholesalers, the I/S ratio was steady at 1.36 and for manufacturers, it was 1.40 for a fourth month.

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

Manufacturing & Trade Dec Nov Oct Dec Y/Y 2019 2018 2017
Business Inventories (% chg) 0.1 -0.2 0.1 2.2 2.2 5.1 3.4
  Retail -0.0 -0.9 0.1 1.1 1.1 4.5 2.3
    Retail excl. Motor Vehicles 0.0 -0.3 0.5 1.9 1.9 1.8 2.0
  Merchant Wholesalers -0.2 0.1 0.1 2.1 2.1 7.3 3.3
  Manufacturing 0.5 0.3 0.2 3.3 3.3 3.5 4.5
Business Sales (% chg)
Total -0.1 0.5 -0.2 1.7 1.5 6.1 5.4
  Retail 0.0 0.3 0.4 5.4 3.4 4.6 4.5
    Retail excl. Motor Vehicles 0.5 -0.1 0.2 6.0 3.2 5.3 4.8
  Merchant Wholesalers -0.7 0.9 -0.9 0.5 0.6 6.7 6.7
  Manufacturing 0.5 0.3 0.1 -0.2 0.7 6.9 5.0
I/S Ratio
Total 1.40 1.39 1.40 1.39 1.40 1.36 1.38
  Retail 1.43 1.43 1.45 1.49 1.45 1.45 1.47
    Retail excl. Motor Vehicles 1.18 1.19 1.19 1.23 1.19 1.20 1.24
  Merchant Wholesalers 1.36 1.36 1.37 1.34 1.35 1.29 1.30
  Manufacturing 1.40 1.40 1.40 1.35 1.38 1.35 1.37
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