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Economy in Brief

U.S. Business Inventories and Sales Post Solid Gains in September
by Sandy Batten  November 16, 2021

• Inventories rose 0.7% m/m while sales gained 0.9% m/m.

• Sales increase strongest in past three months.

• Inventory-to-sales ratio unchanged.

Total business inventories increased 0.7% (7.5% y/y) during September following a 0.8% m/m rise in August. The September increase matched expectations in the Informa Global Markets Survey. Business sales also rose a solid 0.9% m/m (15.5% y/y) in September, up sharply from a meager 0.1% m/m in August. With inventories and sales rising at the similar paces, the inventory-to-sales ratio (I/S) held steady at 1.26 in September, just 0.01 above the lowest level since February 2012.

By sector, wholesale inventories led the increase in total inventories, rising 1.4% m/ (13.1% y/y) in September on top of a 1.3% m/m increase in August. Retail inventories slipped 0.2% m/m (+0.5% y/y) in September, their first monthly decline in four months. However, the September decline was more than accounted for by a 2.9% m/m plunge in motor vehicle inventories. Excluding this decline, the remainder of retail inventories posted a 0.7% m/m (10.1% y/y) increase, led by a 2.4% m/m increase in furniture, electronics and appliances inventories. Factory inventories posted a solid 0.8% m/m gain (8.2% y/y) in September.

Total business sales rose 0.9% m/m in September, their fourth consecutive monthly increase. The September gain was led by a 1.1% m/m (22.0% y/y) rise in wholesale sales. Retail sales posted a 0.9% m/m (12.5% y/y) increase in September, solid though down from the 1.3% m/m gain in August. (Note: in a separate release this morning, retail sales rose a larger-than-expected 1.7% m/m in October.) Factory shipments picked up to 0.6% m/m (11.7% y/y) in September from a subpar 0.1% m/m rise in August.

With overall sales and inventories rising at similar paces, the overall inventory/sales ratio was unchanged at 1.26 in September. The retail I/S ratio slipped slightly to 1.09 in September from 1.10 in August while both the wholesale I/S ratio (1.23) and the manufacturing I/S ratio (1.48) were unchanged. Retail inventories remain historically quite low with the retail I/S ratio just off its all-time low (dating back to January 1967) of 1.07 reached in April.

The manufacturing and trade data are in Haver's USECON database.

Manufacturing & Trade Sep Aug Jul Sep Y/Y 2020 2019 2018
Business Inventories (% chg) 0.7 0.8 0.6 7.5 -2.6 2.4 4.5
  Retail -0.2 0.2 0.4 0.5 -5.6 0.6 4.4
    Retail excl. Motor Vehicles 0.7 0.7 0.5 10.1 0.8 1.7 3.4
  Merchant Wholesalers 1.4 1.3 0.6 13.1 -1.7 1.4 6.2
  Manufacturing 0.8 0.7 0.6 8.2 -0.5 5.3 2.8
Business Sales (% chg)
Total 0.9 0.1 0.5 15.5 -3.0 0.0 5.7
  Retail 0.9 1.3 -2.0 12.5 3.1 3.0 4.2
    Retail excl. Motor Vehicle 0.8 2.5 -1.3 13.6 3.9 3.0 5.0
  Merchant Wholesalers 1.1 -0.9 2.1 22.0 -4.9 -0.2 6.7
  Manufacturing 0.6 0.1 1.5 11.7 -6.7 -2.6 6.0
I/S Ratio
Total 1.26 1.26 1.25 1.35 1.43 1.42 1.36
  Retail 1.09 1.10 1.11 1.22 1.34 1.47 1.46
    Retail excl. Motor Vehicles 1.06 1.06 1.08 1.09 1.15 1.22 1.21
  Merchant Wholesalers 1.23 1.23 1.20 1.33 1.38 1.35 1.28
  Manufacturing 1.48 1.48 1.47 1.53 1.58 1.46 1.37
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