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Economy in Brief

U.S. Business Inventories & Sales Ease
by Tom Moeller  April 13, 2016

Total business inventories edged 0.1% lower m/m (+1.2% y/y) during February following a 0.1% dip in January, revised from +0.1%. Total business sales fell 0.4% m/m (-1.4% y/y), the seventh consecutive month of decline.

Retail inventories increased 0.6% (5.9% y/y) following a 0.4% rise, revised from 0.3%. Motor vehicle & parts inventories declined 2.1% (+1.4% y/y) following four months of little change. Outside of the vehicle sector, retail inventories gained 0.4% (1.2% y/y), after two months of decline. Furniture & home furnishings inventories rose 0.2% (0.6% y/y) following a 0.1% dip. Clothing inventories declined 0.9% (+0.1% y/y) after a 0.3% rise. Building materials inventories jumped 1.4% (10.8% y/y), the same as during the prior month. General merchandise store inventories gained 0.5% (1.2% y/y) after two months of decline. Food & beverage store inventories remained unchanged (1.2% y/y) for a second month.

Merchant wholesale inventories fell 0.5% (+0.6% y/y),  the fifth consecutive month of decline. Inventories in the manufacturing sector continued a lengthy decline and were down 0.4% (-2.3% y/y).

Overall business sales fell 0.4% (-1.4% y/y). Retail sales were off 0.2% (+3.1% y/y) after a 0.3% decline. Wholesale sales dropped 0.2% (-3.1% y/y), down sharply for the fourth straight month, and factory sector shipments declined 0.7% (-3.5% y/y) following seven straight months of decline.

The inventory-to-sales ratio in the business sector remained at 1.41, the highest level since August 2009. The ratio in the retail sector moved to a recovery high of 1.51 while excluding autos it also moved to a recovery high of 1.31. The I/S ratio in the clothing sector of 2.56 and 2.14 in the motor vehicle sector exceeded the 1.49 ratio amongst general merchandisers. Food & beverage stores maintained a ratio of 0.80. Merchant wholesales were near a cycle high of 1.36 while manufacturers' ratio was steady m/m at 1.37.

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

Manufacturing & Trade (%) Feb Jan Dec Feb Y/Y 2015 2014 2013
Business Inventories -0.1 -0.1 0.0 1.2 1.6 3.9 4.3
 Retail 0.6 0.4 0.4 5.9 5.3 2.8 7.6
  Retail excl. Motor Vehicles 0.3 0.2 0.2 4.2 4.4 2.2 4.9
 Merchant Wholesalers -0.5 -0.2 -0.2 0.6 2.0 6.9 4.2
 Manufacturing -0.4 -0.5 -0.2 -2.3 -1.9 2.4 1.7
Business Sales (%)
Total -0.4 -0.8 -0.6 -1.4 -2.4 3.4 3.0
 Retail -0.2 -0.3 0.2 3.1 1.5 3.6 3.9
  Retail excl. Motor Vehicles -0.3 -0.2 0.2 1.8 -0.2 2.5 2.7
 Merchant Wholesalers -0.2 -1.9 -0.3 -3.1 -3.6 4.4 3.1
 Manufacturing -0.7 -0.2 -1.4 -3.5 -4.2 2.5 2.1
I/S Ratio
Total 1.41 1.41 1.40 1.37 1.37 1.31 1.29
 Retail 1.51 1.50 1.49 1.47 1.47 1.43 1.41
  Retail Excl. Motor Vehicles 1.31 1.30 1.30 1.28 1.28 1.24 1.23
 Merchant Wholesalers 1.36 1.37 1.34 1.31 1.30 1.20 1.18
 Manufacturing 1.37 1.37 1.37 1.35 1.35 1.31 1.30
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