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Economy in Brief

U.S. Business Inventories Pick Up Slightly in June
by Carol Stone August 13, 2010

Business inventories continued a halting recovery in June. All together, they rose 0.3%, and May's increase was revised from 0.1% to 0.2%. As visible in the first graph, this hardly constitutes a "recovery" from their total decline during the recession, but it remains a constructive move, nonetheless. Similarly, the inventory/sales ratio picked up to 1.26 in June after an upwardly revised 1.25 in May, coming up a bit from the recent all-time low of 1.23.

Retail stocks, the new information in today's report, were up 0.8% following May's upwardly revised 0.5% (originally 0.3%). However, the gain was all at motor vehicle dealers, where sales were weak in both May and June. July's sales pick-up there, described elsewhere here by Tom Moeller, likely cut into stocks. So the inventory rise in June was not really a sign of renewed confidence by merchants. By store category, furniture stores and clothing stores each saw June inventories rise 0.3%, but other store groups cut their stocks.

In our graph of the retail sector, we have used the log scale option in Haver's DLXVG3 software to put recent movements in historical perspective. Even as the log scale diminishes the appearance of the larger numbers in the later years, the recent plunge still looks dramatic compared to other periods of inventory adjustment since the late 1970s.

The business sales and inventory data are available in Haver's USECON database.

Business Inventories (%) June May April June Y/Y 2009 2008 2007
Total 0.3 0.2 0.4 0.2 -9.8 0.8 4.0
Retail 0.8 0.5 0.2 0.2 -10.4 -3.3 2.5
  Retail ex Motor Vehicles 0.0 0.3 0.5 -0.1 -4.9 -1.9 2.7
Wholesale 0.1 0.5 0.2 -0.3 -10.8 3.7 6.4
Manufacturing -0.1 -0.4 0.6 0.5 -8.8 -0.8 7.6
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