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Economy in Brief

U.S. Business Inventories Accumulate during November as Sales Weaken
by Tom Moeller  January 15, 2021

• Business inventories rise for fifth straight month.

• Sales ease after six months of increase.

• Inventory-to-sales ratio remains at six-year low.

Total business inventories increased 0.5% during November (-3.2% y/y) following a 0.8% October gain, revised from 0.7%. Total business sales slipped 0.1% (+1.5% y/y) after rising an unrevised 0.9%. The inventory-to-sales (I/S) ratio held steady at 1.32. October was revised from 1.31, but it remained a six-year low.

Retail inventories increased 0.7% in November (-7.1% y/y). Auto inventories, which comprise roughly 30% of retail inventories, grew 1.9% (-18.3% y/y). Non-auto retail inventories gained 0.2% (-1.0% y/y), the fifth straight month of increase. General merchandise store inventories, the second largest retail sector, were up 0.1% (-1.1% y/y). Department store inventories rose 0.8% (-11.4% y/y). Clothing store inventories rose 0.6% (-9.7% y/y) while furniture inventories gained 0.2% (-6.0% y/y). Wholesale inventories held steady (-2.1% y/y) while factory sector inventories accumulated 0.7% (-0.7% y/y).

Retail sales declined 1.1% (+6.5% y/y) following a 0.1% dip. Non-auto sales fell 1.0% (+6.7% y/y). Note that the advanced retail goods sales data for December was released today showing a 0.3% decline (+6.3% y/y). Wholesale sector sales improved 0.2% (-0.2% y/y) while factory shipments increased 0.7% (-1.3% y/y).

The inventory-to-sales ratio in the retail sector increased to 1.26 from October's near record low of 1.23 (data date back to 1967). In April, the retail I/S ratio hit a 26-year high of 1.68. The non-auto I/S ratio edged up to 1.13 from its near record low of 1.12. The wholesale sector I/S ratio held steady at 1.31 and the factory ratio stayed at 1.41.

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 Nov Oct Sep Nov Y/Y 2019 2018 2017
Business Inventories (% chg) 0.5 0.8 0.8 -3.2 1.9 4.9 3.2
  Retail 0.7 0.9 1.6 -7.1 1.0 4.6 2.4
    Retail excl. Motor Vehicles 0.2 0.8 1.0 -1.0 1.9 3.7 2.2
  Merchant Wholesalers 0.0 1.3 0.9 -2.1 1.7 6.5 3.0
  Manufacturing 0.7 0.3 -0.1 -0.7 2.8 3.6 4.2
Business Sales (% chg)
Total -0.1 0.9 0.9 1.5 1.6 5.9 5.3
  Retail -1.1 -0.1 1.7 6.5 3.3 4.2 4.6
    Retail excl. Motor Vehicle -1.0 -0.1 1.2 6.7 3.2 5.1 4.9
  Merchant Wholesalers 0.2 1.7 0.4 -0.2 0.6 6.8 6.7
  Manufacturing 0.7 1.2 0.5 -1.3 1.0 6.6 4.7
I/S Ratio
Total 1.32 1.32 1.32 1.39 1.39 1.36 1.38
  Retail 1.26 1.23 1.22 1.44 1.46 1.46 1.48
    Retail excl. Motor Vehicles 1.13 1.12 1.10 1.22 1.22 1.22 1.24
  Merchant Wholesalers 1.31 1.31 1.32 1.33 1.34 1.28 1.30
  Manufacturing 1.41 1.41 1.42 1.40 1.38 1.35 1.38
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