• 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.