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Economy in Brief

U.S. Business Inventories and Sales Rose in June
by Sandy Batten  August 17, 2022

• Inventories continued to build, but slightly more slowly.

• Sales growth picked up.

• Inventory-to-sales ratio unchanged.

Total business inventories rose 1.4% m/m (+18.5% y/y) in June, down slightly from a 1.6% m/m increase in May. A 1.4% gain had been expected in the Informa Global Markets Survey. Business sales rose 1.3% (+14.5% y/y) in June following a 1.0% monthly increase in May. The inventory-to-sales ratio was unchanged at 1.30, still quite low by historical standards but up from its most recent low of 1.26, last reached in last November.

Retail inventories led the overall June build. They were up 2.0% m/m (+19.8% y/y) following a 1.6% monthly gain in May. In the retail sector, motor vehicle inventories jumped up 3.3% m/m in June on top of a 2.4% increase in May. Department store inventories increased 2.5% m/m after a 1.6% m/m rise in May. Clothing inventories gained 2.2% m/m versus 1.6% in May. Wholesale inventories followed close behind retail in June, posting a 1.8% m/m (+25.5% y/y) increase in June after a 1.9% monthly rise in May. Factory inventories rose a more modest 0.4% m/m (+10.5% y/y) in June, down from a 1.3% monthly gain in May.

The gain in total business sales in June was led by wholesalers. Their sales rose 1.8% m/m (+20.4% y/y) following a 0.7% monthly gain in May. Factory shipments slowed to a 1.1% increase (+14.8% y/y) after a 2.1% m/m rise in May. Retail sales increased 0.8% m/m (+7.9% y/y) in June, up from a 0.3% monthly rise in May. (In a separate report this morning, retail sales were unchanged in July from June, largely reflecting declines in motor vehicle and gasoline sales.)

With inventories increasing at about the same pace as sales, the overall inventory-to-sales ratio was unchanged at 1.30 in June from May. The retail sector I/S ratio edged up to 1.21 from 1.20 in May. Excluding motor vehicle inventories from retail, that I/S ratio was unchanged at 1.16 in June. The factory I/S ratio slipped to 1.45 in June from 1.46 while the wholesale I/S ratio was unchanged at 1.26.

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

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