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Economy in Brief

U.S. Business Inventory Gain Slowed, Retail Inventories Fell
by Tom Moeller May 13, 2008

Total business inventories grew just 0.1% during March. The gain was less than the expected 0.4% rise and the 0.5% February increase was little revised. The annualized three month growth in inventories backed off slightly to 6.6% from the elevated 8.5% growth rate in February.

Retail inventories fell 0.5% as the three month growth rate went negative at -0.9%. Inventories of motor vehicle & parts fell at a 0.9% rate during the last three months due to production cutbacks. Outside of autos, however, retail inventories plunged 0.4% in March and at a 1.0% rate during the last three months, the first decline since 2003.

The industry detail in the retail sector indicated that furniture inventories fell at an annual rate of 7.0% during the last three months. Clothing & accessory store inventories also dropped hard at a 7.9% rate during that period. General merchandise stores' inventories finally fell at a 2.9% rate due to the 1.1% cutback in March.

Factory inventories increased 0.9% following the upwardly revised 0.7% February increase. Higher oil prices continued to drive the increase and they rose 5.3%, 89.9% at an annual rate over the last three months. But elsewhere accumulation also has been strong. Excluding petroleum, factory inventories rose at a 7.9% rate over the last three months versus 5.9% growth during 4Q and 1.7% in 3Q.

Wholesale inventories fell 0.1% after the 0.9% February surge. Less the strong gains in petroleum inventories, accumulation still has been very firm at a 9.9% rate over the last three months after 4.9% growth last year.

Total business sales rose 1.0% and made all of the prior month's decline. Three month growth recovered to 5.5% after having gone negative in February. The I/S ratio fell slightly to 1.27 in March. That's the average for the year to date and it is equal to all of 2007.

Business Inventories March February Y/Y 2007 2006 2005
Total 0.1% 0.5% 5.2% 3.8% 5.9% 6.0%
  Retail -0.5% -0.1% 2.4% 2.6% 3.5% 2.3%
    Retail excl. Auto -0.4% -0.2% 1.8% 2.7% 4.9% 3.9%
  Wholesale -0.1% 0.9% 6.8% 5.5% 8.3% 7.3%
  Manufacturing 0.9% 0.7% 6.5% 3.7% 6.4% 8.9%
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