U.S. Business Inventory Accumulation Continues Firm

Businesses during September continued their earlier effort to lift inventories. The 0.9% rise in inventories followed a like August gain which was revised up from 0.6%. The increases confirm the 1.4 percentage point contribution to real GDP growth from inventories reported last month. Also, they left the inventory-to-sales ratio at 1.27 which was up sharply from its low of 1.23.

Retailers raised inventories by 0.8% though that was weaker than the additions of the prior three months. Autos dealers raised inventories by 1.7% (18.1% y/y) which was roughly half the accumulation of the prior three months. Excluding motor vehicle dealers, inventories rose the same 0.4% as during August and the y/y gain reached 2.4%, its highest since early-2008. Notably, however, the increases were not broad-based last month. Only the 0.7% increase (1.1% y/y) in building materials was meaningful though lesser gains in other areas did reverse the sharp rates of decumulation that earlier had been prevalent.

In the factory sector a 0.7% inventory increase confirmed the news in the earlier reports from the factory sector. That also was the case with the sharply higher 1.5% gain in wholesale inventories. Little of this was attributable to higher oil prices. Petroleum inventories rose 1.7% for the month (26.5% y/y) and less oil wholesale inventories rose 1.5% (7.1% y/y).

The business sales and inventory data are available in Haver's USECON database. Note that in a value-added feature, the database includes series calculated by Haver database managers showing sales, inventories and I/S ratios for total business less motor vehicle dealers and related wholesale operations.