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Economy in Brief

U.S. Business Inventories Edge Up While Sales Slip in December
by Sandy Batten  February 12, 2016

Total business inventories edged up 0.1% m/m (1.7% y/y) in December, following a 0.1% m/m decline in both November and October. Total business sales fell 0.6% m/m (-2.7% y/y) in December for their third consecutive monthly decline.

Retail inventories increased 0.4% m/m (5.4% y/y) on top of a 0.3% m/m gain in November. Motor vehicle & parts inventories jumped 0.9% (+7.3% y/y), the largest monthly change in the fourth quarter. Outside of the vehicle sector, retail inventories gained 0.2% (4.5% y/y) after two months of 0.3% increases. The new information in today's report was retail inventories. Including revisions, the retail inventory data was slightly softer than that assumed by the BEA in its first estimate of 4Q GDP. Consequently, they point, at least on the margin, to a small downward revision to the second estimate of the fourth quarter figures to be released on February 26.

Merchant wholesalers inventories eased 0.1% (+1.9% y/y) while the value of factory sector stockpiles rose 0.2% (-1.6% y/y), their first increase in six months.

The 0.6% m/m decline in business sales in December was led by a 1.4% m/m drop in manufacturing shipments (sales). Retail sales were unchanged in the month while wholesale sales slipped 0.3% m/m.

The business sector inventory-to-sales ratio rose to 1.39, its highest level since May 2009. The rise reflected a jump in the manufacturing sector to 1.38 from 1.35, its highest reading since July 2009 and a slight rise in the retail sector to 1.49 from 1.48, its highest level since May 2009. The merchant wholesale I/S ratio was unchanged at 1.32.

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

Manufacturing & Trade (%) Dec Nov Oct Dec Y/Y 2015 2014 2013
Business Inventories 0.1 -0.1 -0.1 1.7 1.7 3.9 4.3
 Retail 0.4 0.3 0.1 5.4 5.4 2.8 7.6
  Retail excl. Motor Vehicles 0.2 0.3 0.3 4.5 4.5 2.2 4.9
 Merchant Wholesalers -0.1 -0.4 -0.3 1.9 1.8 6.7 4.1
 Manufacturing 0.2 -0.3 -0.2 -1.6 -1.7 2.4 1.7
Business Sales (%)
Total -0.6 -0.4 -0.3 -2.7 -2.4 3.5 2.8
 Retail 0.0 0.3 -0.1 1.8 1.4 3.6 3.8
  Retail excl. Motor Vehicles -0.1 0.2 0.0 0.4 -3.3 2.6 2.6
 Merchant Wholesalers -0.3 -1.3 -0.2 -4.5 -3.6 4.3 3.0
 Manufacturing -1.4 -0.1 -0.7 -4.7 -4.3 2.6 1.9
I/S Ratio
Total 1.39 1.38 1.38 1.31 1.37 1.31 1.29
 Retail 1.49 1.48 1.48 1.43 1.47 1.43 1.41
  Retail Excl. Motor Vehicles 1.30 1.30 1.29 1.24 1.30 1.24 1.23
 Merchant Wholesalers 1.32 1.32 1.31 1.22 1.30 1.20 1.18
 Manufacturing 1.38 1.35 1.36 1.32 1.35 1.31 1.30
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