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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Peter D'Antonio June 15, 2021
• Inventory gains appear to be stalling.
• April business sales built on March gains.
• Inventory-to-sales ratio continued to decline.
Total business inventories edged down 0.2% (+1.3% y/y) during April reversing the 0.2% March rise. Inventories had risen by an average of 0.7% per month for the prior half year. April business sales increased by 0.6% (40.0% y/y) following a 5.8% surge in March. Sales are up 9.5% thus far this year.
Retail inventories declined sharply in the past two months. The 1.8% drop (-5.2% y/y) in April followed a 1.4% decline in March. These declines were entirely due to the 13.3% two-month plunge in motor vehicle stocks, which account for 27% of total retail inventories. Excluding motor vehicles, retail inventories rose 0.6% (+6.0% y/y) after a 0.7% rise. Furniture inventories gained 0.7% (+6.1% y/y) and inventories of building materials and garden supplies increased 0.8% (+17.4% y/y). Clothing inventories increased 2.3% (+9.5% y/y) and general merchandise inventories rose 0.6% (+8.9% y/y). Wholesale inventories increased 0.8% (5.2% y/y) in April while factory inventories rose 0.3% (3.6% y/y).
April business sales improved on their strong March gains. Retail sales increased 0.5% (48.1% y/y) after surging 11.0% in March. However, May retail sales were released earlier today and showed some retreat from the tremendous early-year gains, declining 1.4% (+28.2% y/y).
April wholesale sales strengthened 0.8% (43.6 y/y), while manufacturing shipments rose 0.4% (28.2% y/y).
As sales continued to grow faster than inventories through April, the inventory-to-sales (I/S) ratio fell to a 10-year low of 1.25 (down from 1.35 at the end of 2020). The bulk of this year's decline in the I/S ratio has been in the retail sector, which fell to a record low of 1.07 (from 1.28 at yearend). I/S ratios remained unchanged in April for wholesale trade (1.22) and manufacturing (1.48).
The manufacturing and trade data are in Haver's USECON database.
Manufacturing & Trade | Apr | Mar | Feb | Apr Y/Y | 2020 | 2019 | 2018 |
---|---|---|---|---|---|---|---|
Business Inventories (% chg) | -0.2 | 0.2 | 0.6 | 1.3 | -2.6 | 2.4 | 4.5 |
Retail | -1.8 | -1.4 | 0.1 | -5.2 | -5.6 | 0.6 | 4.4 |
Retail excl. Motor Vehicles | 0.6 | 0.7 | 1.4 | 6.0 | 0.8 | 1.7 | 3.4 |
Merchant Wholesalers | 0.8 | 1.2 | 1.0 | 5.2 | -1.7 | 1.4 | 6.2 |
Manufacturing | 0.3 | 0.8 | 0.8 | 3.6 | -0.5 | 5.3 | 2.8 |
Business Sales (% chg) | |||||||
Total | 0.6 | 5.8 | -1.6 | 40.0 | -2.9 | 0.0 | 5.7 |
Retail | 0.5 | 11.0 | -3.0 | 48.1 | 3.1 | 3.0 | 4.2 |
Retail excl. Motor Vehicle | -0.7 | 9.2 | -2.8 | 35.2 | 4.0 | 3.0 | 5.0 |
Merchant Wholesalers | 0.8 | 4.3 | 0.0 | 43.6 | -4.7 | -0.2 | 6.7 |
Manufacturing | 0.4 | 2.1 | -1.8 | 28.2 | -6.7 | -2.6 | 6.0 |
I/S Ratio | |||||||
Total | 1.25 | 1.26 | 1.33 | 1.73 | 1.43 | 1.42 | 1.36 |
Retail | 1.07 | 1.10 | 1.23 | 1.67 | 1.34 | 1.47 | 1.46 |
Retail excl. Motor Vehicles | 1.04 | 1.03 | 1.12 | 1.33 | 1.16 | 1.22 | 1.21 |
Merchant Wholesalers | 1.22 | 1.22 | 1.26 | 1.67 | 1.38 | 1.35 | 1.28 |
Manufacturing | 1.48 | 1.48 | 1.50 | 1.83 | 1.58 | 1.46 | 1.37 |