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Economy in Brief

U.S. Business Inventories Rose Again in February, Sales Fell
by Sandy Batten  April 15, 2021

• Total business sales fell back in February after jump in January.

• Total inventories continued to rise.

• Total business inventory-to-sales ratio rose in February after outsized fall in January.

Total business inventories rose 0.5% m/m (-0.7% y/y) in February, their eighth consecutive monthly increase, following a 0.4% m/m gain in January. Total business sales receded 1.9% m/m (+5.7% y/y) in February after having jumped 4.5% m/m in January. This was their first monthly decline in ten months.

Retail inventories were unchanged in February (-5.1% y/y). This stagnation was due entirely to a 2.6% m/m decline in motor vehicle inventories, which account for about 30% of total inventories. Excluding motor vehicles, other inventories rose 1.2% m/m (2.4% y/y). Furniture inventories were up 2.4% m/m in February, and inventories of building materials and garden supplies increased 2.7% m/m. Wholesale inventories increased 0.6% m/m in February while factory inventories rose 0.8% m/m.

Sales in February were weak across all major sectors. Retails sales plunged 2.8% m/m (+9.9% y/y) in February after a 7.4% m/m jump in January. Extremely severe winter weather played a key role in the February decline. Separately this morning, retail sales were released for March. They exploded 9.8% m/m, driven by another round of government payments to individuals, more normal weather, the accelerating rollout of COVID vaccinations, and a more widespread reopening of the economy. Wholesale sales fell 0.8% m/m in February while factory sales declined 2.0%.

With sales falling while inventories continued to rise, the inventory-to-sales (I/S) ratio rebounded in February, rising to 1.30 after having falling sharply to 1.27 in January. Prior to the January decline, it had held steady at 1.32 for four of the five previous months. The I-S ratio rose in all three sectors: to 1.23 in retail; to 1.27 in wholesale; and to 1.40 in manufacturing.

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

Manufacturing & Trade Feb Jan Dec Feb Y/Y 2020 2019 2018
Business Inventories (% chg) 0.5 0.4 0.7 -0.7 -2.5 1.7 4.8
  Retail 0.0 -0.3 1.7 -5.1 -5.3 0.9 4.6
    Retail excl. Motor Vehicles 1.2 0.2 1.9 2.4 1.1 1.7 3.7
  Merchant Wholesalers 0.6 1.4 0.3 2.0 -1.7 1.4 6.2
  Manufacturing 0.8 0.2 0.3 0.9 -0.6 2.8 3.6
Business Sales (% chg)
Total -1.9 4.5 0.9 5.7 -2.6 1.3 5.9
  Retail -2.8 7.4 -0.9 9.9 3.2 3.4 4.2
    Retail excl. Motor Vehicle -2.6 8.2 -1.7 9.8 3.8 3.3 5.1
  Merchant Wholesalers -0.8 4.4 1.4 6.4 -4.6 -0.2 6.7
  Manufacturing -2.0 1.8 2.1 1.0 -5.7 1.0 6.6
I/S Ratio
Total 1.30 1.27 1.32 1.38 1.39 1.40 1.36
  Retail 1.23 1.19 1.29 1.42 1.34 1.46 1.46
    Retail excl. Motor Vehicles 1.12 1.08 1.17 1.21 1.17 1.23 1.22
  Merchant Wholesalers 1.27 1.25 1.29 1.32 1.38 1.35 1.28
  Manufacturing 1.40 1.36 1.38 1.40 1.47 1.38 1.35
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