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Economy in Brief

Business Inventories Have First Gain in 6 Months
by Carol Stone, CBE  May 13, 2016

Total business inventories grew 0.4% m/m in March (+1.5% y/y) following a 0.1% dip in February, which was unrevised. Total business sales rose 0.3% m/m (-1.7% y/y), their first increase since last June.

Retail inventories increased 1.0% in March (+6.7% y/y) following a 0.7% rise, revised from 0.6%. Motor vehicle & parts inventories rose 2.3% (+1.4% y/y). Outside the vehicle sector, retail inventories gained 0.4% (4.2% y/y) following 0.2% in February and 0.1% in January. Furniture & home furnishings inventories rose 0.2% (-0.6% y/y) following 0.1% in February. Clothing store inventories were unchanged m/m (+4.6% y/y) after a 0.4% rise. Building materials inventories were up 0.4% (6.0% y/y), similar to moves in the prior two months. General merchandise store inventories gained 0.7% (3.1% y/y) after two months of essentially no change. Food & beverage store inventories dropped 0.8% (0.8% y/y), reversing a February increase of the same size.

Merchant wholesale inventories broke a five-month string of declines with a modest 0.1% rise in March (+0.3% y/y). Inventories in the manufacturing sector broke a string of eight consecutive declines with a 0.2% rise (-2.1% y/y).

Overall business sales gained 0.3% (-1.7% y/y). Retail sales in March were off 0.3% (+1.1% y/y) after edging up 0.1%; as noted elsewhere today, April retail sales rebounded sharply. Wholesale sales advanced 0.7% (-2.0% y/y), their first increase in six months, and factory sector shipments also broke their string of declines with a 0.5% increase (-3.7% y/y) after eight straight months of decline.

The inventory-to-sales ratio in the business sector remained at 1.41 for a third month, the highest level since August 2009. The ratio in the retail sector rose to 1.52, also its highest since mid-2009 although excluding autos, it edged down to 1.29 in March from 1.30 the month before. The I/S ratio in the motor vehicle sector rose to 2.30 from 2.18 in the month, clothing inventories rose to 2.56 months of sales from 2.54 and general merchandise store inventories edged up to a 1.49 ratio to sales from 1.48. Other sectors' I/S ratios were steady, furniture at 1.56, building materials at 1.78, and food at 0.78.

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

Manufacturing & Trade (%) Mar Feb Jan Mar Y/Y 2015 2014 2013
Business Inventories 0.4 -0.1 -0.1 1.5 1.5 3.9 4.3
 Retail 1.0 0.7 0.3 6.7 5.3 2.8 7.4
  Retail excl. Motor Vehicles 0.4 0.2 0.1 4.2 4.1 2.6 4.8
 Merchant Wholesalers 0.1 -0.6 -0.2 0.3 1.9 6.5 4.0
 Manufacturing 0.2 -0.5 -0.5 -2.1 -1.9 2.4 1.9
Business Sales (%)
Total 0.3 -0.3 -0.8 -1.7 -2.6 3.3 2.9
 Retail -0.3 0.1 -0.3 1.1 1.6 3.9 3.8
  Retail excl. Motor Vehicles 0.6 -0.1 -0.2 1.4 0.2 3.2 2.6
 Merchant Wholesalers 0.7 -0.2 -1.9 -2.0 -4.3 3.6 3.1
 Manufacturing 0.5 -0.8 -0.2 -3.7 -4.2 2.5 2.1
I/S Ratio
Total 1.41 1.41 1.41 1.37 1.37 1.31 1.29
 Retail 1.52 1.50 1.49 1.44 1.46 1.43 1.41
  Retail Excl. Motor Vehicles 1.29 1.30 1.29 1.26 1.27 1.24 1.23
 Merchant Wholesalers 1.36 1.36 1.37 1.32 1.32 1.21 1.18
 Manufacturing 1.37 1.37 1.37 1.34 1.35 1.31 1.30
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