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Economy in Brief

U.S. Business Inventories Ease in January While Sales Strengthen
by Tom Moeller  March 17, 2020

Total business inventories slipped an expected 0.1% (+1.1% y/y) during January following an unrevised 0.1% December gain. The anticipated figure is from the Informa Global Markets survey. Business sales increased 0.6% (+2.1% y/y) following a 0.1% improvement. The rise in sales relative to the inventory decline lowered the inventory-to-sales ratio to 1.38, its lowest point since March of last year.

Retail inventories held steady (0.3% y/y) in January after falling for two months. Motor vehicle dealers' inventories declined 0.6% in January (-2.2% y/y), down for the fourth straight month. Nonauto inventories rose 0.3% (1.7% y/y) after holding steady in December. Inventories of furniture & home furnishings rose 0.5% (-2.6% y/y) following two months of decline. Clothing inventories were off 0.2% (-2.0% y/y), down for six straight months. General merchandise store inventories rose 0.4% (-1.4% y/y) but department store inventories increased 0.7% (-6.3% y/y), the first increase in four months. Wholesale inventories fell 0.4% (+0.4% y/y) after a 0.3% decline. Factory sector inventories eased 0.1% (+2.5% y/y) after a 0.4% strengthening.

Sales at retail stores (not including food services) strengthened 0.6% (4.7% y/y) after easing 0.1% in December. Excluding auto dealers, retail sales improved 0.5% (4.1% y/y) after rising 0.4%. Wholesale sector sales surged 1.6% (2.2% y/y), the largest rise since last March. Shipments from the factory sector declined 0.5% (-0.4% y/y) and reversed December's increase.

The inventory-to-sales ratio in the retail sector declined to 1.42, the lowest level since November 2014. The ratio for retailers excluding auto dealers held steady at 1.18, down from the March 2016 high of 1.29. For merchant wholesalers, the I/S ratio fell to 1.33, a ten-month low. Conversely, the factory sector I/S ratio was steady at 1.40, the highest level since November 2016.

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

Manufacturing & Trade Jan Dec Nov Jan Y/Y 2019 2018 2017
Business Inventories (% chg) -0.1 0.1 -0.2 1.1 2.1 5.1 3.4
  Retail 0.0 -0.1 -0.9 0.3 1.0 4.5 2.3
    Retail excl. Motor Vehicles 0.3 0.0 -0.3 1.7 1.9 1.8 2.0
  Merchant Wholesalers -0.4 -0.3 0.1 0.4 2.0 7.3 3.3
  Manufacturing -0.1 0.4 0.3 2.5 3.1 3.5 4.5
Business Sales (% chg)
Total 0.6 0.1 0.5 2.1 1.5 6.1 5.4
  Retail 0.6 -0.1 0.3 4.7 3.4 4.6 4.5
    Retail excl. Motor Vehicle 0.5 0.4 -0.1 4.1 3.2 5.3 4.8
  Merchant Wholesalers 1.6 -0.2 0.9 2.2 0.7 6.7 6.7
  Manufacturing -0.5 0.5 0.3 -0.4 0.7 6.9 5.0
I/S Ratio
Total 1.38 1.39 1.39 1.40 1.40 1.36 1.38
  Retail 1.42 1.43 1.43 1.48 1.45 1.45 1.47
    Retail excl. Motor Vehicles 1.18 1.18 1.19 1.21 1.19 1.20 1.24
  Merchant Wholesalers 1.33 1.36 1.36 1.35 1.35 1.29 1.30
  Manufacturing 1.40 1.40 1.40 1.36 1.38 1.35 1.37
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