U.S. Business Inventory Accumulation Eases

Total business inventories increased 0.5% (4.2% y/y) during August following a 0.7% July rise, revised from 0.6%. Total business sales increased 0.5% (7.8% y/y), following a 0.2% gain. The inventory-to-sales ratio held steady at 1.34. It peaked early in 2016 at 1.43.

Retail inventories increased 0.7% (2.2% y/y) in August, following a 0.6% gain. Auto inventories jumped 1.8% (3.4% y/y) after a 1.4% rise. Non-auto retail inventories held steady (1.5% y/y) following little change during the prior three months. General merchandise inventories edged 0.1% higher (0.3% y/y) after a 0.4% increase. In the department store sector, inventories declined 0.2% (-2.8% y/y), down for the third straight month. Building materials inventories rose 0.5% (7.9% y/y) after a 0.6% rise, but clothing store inventories improved just 0.1% (-0.4% y/y). Inventories of furniture, electronics and appliances strengthened 0.8% (0.0% y/y) after a 1.3% rise. As reported earlier, wholesale inventories rose 1.0% (5.3% y/y) following a 0.6% rise. Factory sector inventories slipped 0.1% (+5.1% y/y) after a 0.9% jump.

Retail sales  held steady (6.1% y/y) in August after a 0.5% improvement. Non-auto sales rose 0.2% (6.5% y/y) after a 0.7% gain. Wholesale sector sales improved 0.8% (9.2% y/y) following a 0.2% rise. Shipments from the factory sector strengthened 0.5% (7.8% y/y) after no change in July.

As the overall business inventory-to-sales (I/S) ratio held at 1.34 in August, the retail sector ratio inched higher to 1.44, but remained down sharply from the levels averaged during the prior two years. The non-auto I/S ratio also was steady at 1.19, its lowest level since early-2012. The ratio peaked at 1.29 early in 2016. The wholesale sector I/S ratio also was unchanged m/m at 1.26. The manufacturing sector I/S ratio slipped to 1.34 and remained near the three-year low.

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