Global| Oct 14 2009U.S. Business Inventory Decumulation Continues At A Record Rate
by:Tom Moeller
|in:Economy in Brief
Summary
Why hold inventories if they're loosing value and the demand outlook is uncertain? These two questions are behind the decumulation which continued through August. Business inventories fell another 1.5% which exceeded expectations for [...]
Why hold inventories if they're loosing value and the demand outlook is uncertain? These two questions are behind the decumulation which continued through August. Business inventories fell another 1.5% which exceeded expectations for a 0.9% drop. The drop was pervasive amongst businesses and the 14.9% three-month rate of decline is a record.
Retail inventories fell a hefty 2.3% during August. That was led by a 7.9% (-31.1% y/y) drop in auto inventories followed by a 0.3% (-6.4% y/y) shrinkage in nonauto inventories. Furniture inventories (-12.3% y/y) continued down as did clothing inventories (-8.7% y/y). General merchandise inventories posted an uptick but they still were off 4.1% y/y and building materials stores shed 0.6% of inventories (-9.0% y/y. Factory inventories fell 0.8% and at an accelerated 11.5% y/y. Wholesale inventories were off 1.3% and, excluding oil, wholesale inventories fell 1.5% (-15.0% y/y).
Businesses' success in slashing inventories has kept up with recent weakness in sales. As a result, the inventory-to-sales ratio for total business fell to its cycle low of 1.33 versus a high of 1.46 in January. The latest was the lowest since last September.
The business sales and inventory data are available in Haver's USECON database.
Disagreement About The Inflation Outlook from the Federal Reserve Bank of San Francisco is available here
| Business Inventories (%) | August | July | June | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|---|
| Total | -1.5 | -1.1 | -1.4 | -13.3 | 0.6 | 4.0 | 6.4 |
| Retail | -2.3 | -1.0 | -1.2 | -14.1 | -3.1 | 2.5 | 3.3 |
| Retail excl. Auto | -0.3 | -0.5 | -0.5 | -6.4 | -1.8 | 2.7 | 4.7 |
| Wholesale | -1.3 | -1.6 | -2.1 | -14.7 | 3.1 | 6.2 | 8.2 |
| Manufacturing | -0.8 | -0.9 | -1.1 | -11.5 | 2.1 | 3.7 | 8.2 |
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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