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Economy in Brief

U.S. Business Inventories Rise In August Along With Sales
by Tom Moeller  October 16, 2020

• Business inventory accumulation accelerates.

• Sales growth eases.

• Inventory-to-sales ratio falls further to six-year low.

Total business inventories rose 0.3% (-5.5% y/y) during August following an unrevised 0.1% uptick in July. This is only the second increase since the beginning of the year. Total business sales gained 0.6% (-0.4% y/y) following a 3.4% jump in July. The inventory-to-sales (I/S) ratio dipped to 1.32. In April, the I/S ratio equaled a 27-year high of 1.67.

Retail inventories increased 0.4% in August (-10.5% y/y). Auto inventories, which comprise roughly 30% of retail inventories, grew 0.3% (-24.7% y/y). Non-auto retail inventories gained 0.5% (-2.6% y/y). General merchandise inventories, the second largest retail sector, rose 0.8% (-5.1% y/y). In the department store sector, a subset of general merchandise, inventories surged 2.4% (-15.4% y/y). Wholesale inventories rose 0.4% (-5.2% y/y) while factory sector inventories held steady ( -1.0% y/y).

Retail sales increased 0.2% (5.4% y/y) as non-auto sales held steady. The advanced retail sales data for September was released today and indicated a 1.9% jump (8.2% y/y). Wholesale sector sales surged 1.4% (-2.3% y/y while factory shipments improved 0.3% (-3.9% y/y).

The inventory-to-sales ratio in the retail sector held steady at 1.23 versus June's record low of 1.22 (data date back to 1967). The non-auto I/S ratio rose slightly to 1.12 from its record low of 1.11 in July. The wholesale I/S ratio edged lower to 1.31 and the factory sector ratio held steady at 1.43.

The manufacturing and trade, industrial production and international trade data are in Haver's USECON database. Detailed industrial production data can be found in the IP database

Manufacturing & Trade Aug Jul Jun Aug Y/Y 2019 2018 2017
Business Inventories (% chg) 0.3 0.1 -1.1 -5.5 1.9 4.9 3.2
  Retail 0.4 1.2 -2.7 -10.5 1.0 4.6 2.4
    Retail excl. Motor Vehicles 0.5 0.6 -0.9 -2.6 1.9 3.7 2.2
  Merchant Wholesalers 0.4 -0.2 -1.3 -5.2 1.7 6.5 3.0
  Manufacturing 0.0 -0.6 0.5 -1.0 2.8 3.6 4.2
Business Sales (% chg)
Total 0.6 3.4 8.6 -0.4 1.6 5.9 5.3
  Retail  0.2 0.8 6.9 5.4 3.4 4.2 4.6
    Retail excl. Motor Vehicle 0.0 1.2 6.3 5.5 3.3 5.1 4.9
  Merchant Wholesalers 1.4 4.8 9.0 -2.3 0.6 6.8 6.7
  Manufacturing 0.3 4.7 10.0 -3.9 1.0 6.6 4.7
I/S Ratio
Total 1.32 1.33 1.37 1.39 1.39 1.36 1.38
  Retail 1.23 1.23 1.22 1.45 1.46 1.46 1.48
    Retail excl. Motor Vehicles 1.12 1.11 1.12 1.21 1.23 1.22 1.24
  Merchant Wholesalers 1.31 1.32 1.38 1.35 1.34 1.28 1.30
  Manufacturing 1.43 1.43 1.51 1.39 1.38 1.35 1.38
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