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Economy in Brief

U.S. Business Inventories Rise for the Seventh Straight Month in January, but at a Decelerating Rate
by Kathleen Stephansen  March 16, 2021

• Total business sales jump in January.

• Total business inventory-to-sales ratio resumes its downward correction.

Total business inventories rose 0.3% during January (-1.8% y/y) following an upwardly revised 0.8% in December (from 0.6%). Total business sales jumped 4.7% (7.1% y/y) after a 1.0% (2.7% y/y) rise in December.

Retail inventories dropped 0.5% in January (-5.8% y/y).

- Auto inventories, which comprise roughly 30% of retail inventories, declined by 1.5% (-17.9% y/y).
- Non-auto retail inventories fell ever so slightly, by 0.1% (+0.7% y/y), the first monthly decline since June of last year.
- General merchandise store inventories, the second largest retail sector, dropped 1.5% but rose 1.1% y/y.
- Department store inventories rose 0.6% (-9.2% y/y). Clothing store inventories were close to unchanged over the month (0.04% but -9.8%% y/y), while furniture inventories gained 2.1% (-5% y/y). Food & beverage store inventories dropped 0.8% (+1.6% y/y).

Wholesale inventories rose 1.3% (+0.6% y/y) while factory sector inventories rose 0.1% (-0.4% y/y).

January retail sales jumped 7.4% (+13% y/y) but declined 3.1% m/m (+9.6% y/y) in February.

- Non-auto sales rose 8.2% (12.5% y/y) in January but declined 2.7% (+9.7% y/y) in February.
- Wholesale sector sales rose 4.9% (5.9% y/y) while factory shipments increased 1.9% (2.7% y/y).

The inventory-to-sales (I/S) ratio fell to 1.26 after holding steady at 1.32 for five straight months.

- The inventory-to-sales ratio in the retail sector declined to 1.19 in January from December's 1.29. In April 2020, the retail I/S ratio hit a 26-year high of 1.68.
- The non-auto I/S ratio declined noticeably to 1.08, from 1.17 in December.
- The wholesale sector I/S ratio fell to 1.24, its lowest point since June 2018, and the factory ratio fell to 1.36.

The manufacturing and trade, industrial production and international trade data are in Haver's USECON database (NTI and [email protected]).

Manufacturing & Trade Jan Dec Nov Jan Y/Y 2020 2019 2018
Business Inventories (% chg) 0.3 0.8 0.5 -1.8 -2.4 1.7 4.9
  Retail -0.5 1.7 0.7 -5.8 -5.3 0.9 4.6
    Retail excl. Motor Vehicles -0.1 1.9 0.3 0.7 1.1 1.7 3.7
  Merchant Wholesalers 1.3 0.6 0.0 0.6 -1.4 1.4 6.5
  Manufacturing 0.1 0.3 0.8 -0.4 -0.6 2.8 3.6
Business Sales (% chg)
Total 4.7 1.0 0.0 7.1 -2.5 1.5 5.9
  Retail 7.4 -0.9 -1.0 13.0 3.2 3.4 4.2
    Retail excl. Motor Vehicle 8.1 -1.7 -0.8 12.5 3.8 3.3 5.1
  Merchant Wholesalers 4.9 1.9 0.3 5.9 -4.3 0.5 6.8
  Manufacturing 1.9 2.1 0.8 2.7 -5.7 1.0 6.6
I/S Ratio
Total 1.26 1.32 1.32 1.38 1.39 1.39 1.36
  Retail 1.19 1.29 1.26 1.43 1.34 1.46 1.46
    Retail excl. Motor Vehicles 1.08 1.17 1.13 1.21 1.17 1.23 1.22
  Merchant Wholesalers 1.24 1.29 1.31 1.31 1.37 1.34 1.28
  Manufacturing 1.36 1.38 1.41 1.40 1.47 1.38 1.35
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