Global| Feb 15 2011U.S. Business Inventory Accumulation Recovers
by:Tom Moeller
|in:Economy in Brief
Summary
The rate of business inventory accumulation picked back up in December. The 0.8% gain was double the 0.4% November increase, revised from 0.2%. During the last three months, inventories rose at an 8.0% annual rate versus the Q3 peak [...]
The rate of business inventory accumulation picked back up in December. The 0.8% gain was double the 0.4% November increase, revised from 0.2%. During the last three months, inventories rose at an 8.0% annual rate versus the Q3 peak of 14.0%. Recent inventory accumulation certainly was voluntary since it accompanied a 1.1% increase (8.7% y/y) in business sales. In Q4, sales rose at a 17.1% annual rate. Despite all the inventory accumulation, the inventory-to-sales ratio remained at 1.25, just slightly below where it was before the recent recession began. That represents a significant correction after the unwanted surge during the economic downturn.
A quicker rate of inventory accumulation was broad-based at yearend. Retail inventories rose 0.4% in December and recovered weakness in the prior two months. Furniture (5.4% y/y), general merchandise (+4.8% y/y) and apparel (2.7% y/y) inventory accumulation each accelerated. Accumulation of auto inventories slowed for the quarter but for the year picked up to 13.1%, the strongest since 2002. Less autos, inventories increased 3.3% y/y after two years of decline. Nevertheless, strict inventory management left the retail I/S ratio near its all-time low.
In the wholesale sector, inventories jumped 1.0% in December, helped by a 1.2% increase in petroleum (14.1% y/y) with higher prices. Nevertheless, wholesale inventories less petroleum jumped 1.0% and rose a strong 10.4% y/y. In the factory sector, inventories jumped another 1.1% (7.9% y/y) following the 8.8% decumulation during 2009.
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.
| Business Inventories (%) | Dec | Nov | Oct | Dec Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total | 0.8 | 0.4 | 0.8 | 8.0 | 8.0 | -9.9 | 0.8 |
| Retail | 0.4 | 0.0 | -0.6 | 5.9 | 5.9 | -10.4 | -3.3 |
| Retail ex Motor Vehicles | 0.7 | 0.4 | -0.2 | 3.3 | 3.3 | -4.8 | -1.9 |
| Wholesale | 1.0 | -0.0 | 1.7 | 10.5 | 10.5 | -10.8 | 3.7 |
| Manufacturing | 1.1 | 0.9 | 1.1 | 7.9 | 7.9 | -8.8 | -0.8 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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