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Economy in Brief

Business Inventories Increase Slightly; Sales Jump
by Tom Moeller  August 12, 2016

Total business inventories edged 0.2% higher (0.5% y/y) during June following an unrevised 0.2% increase in May. Total business sales strengthened 1.2% (-0.6% y/y) after a 0.3% rise, revised from 0.2%.

Retail inventories rose 0.5% (5.5% y/y) for a second consecutive month. Inventories excluding motor vehicles and parts rose 0.2% m/m (2.9% y/y) after a 0.3% rise. Motor vehicle & parts inventories inventories increased 0.9% (10.9% y/y) and have been strengthening all year. Food & beverage store inventories increased 0.7% (3.1% y/y), but gains elsewhere in the retail sector have been declining or minimal. Merchant wholesale inventories increased 0.3%, as reported earlier this weak, and factory sector inventories eased 0.1%, also as reported earlier.

Total business sales jumped 1.2%, but remained down 0.6% y/y. Sales were strong across sectors. Wholesale sector sales strengthened 1.9% (-0.4% y/y) after two firm monthly increases. Retail sales increased 0.9% (2.6% y/y), as already reported. Sales excluding autos jumped 1.0% (2.9% y/y) on the strength of building material sales. Factory sector shipments improved 0.7%, but they were down 3.5% y/y.

The inventory to sales ratio eased to 1.39, its lowest level since November. The retail sector ratio held steady at 1.50. The I/S ratio excluding autos, however, declined to 1.27, its lowest level since August. Inventory control in the durable goods sector, outside of autos, has been notable. The I/S ratio in the soft goods area, however, has been rising. Merchant wholesalers have been lowering their I/S ratio, as have manufacturers.

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

Manufacturing & Trade Jun May Apr Jun Y/Y 2015 2014 2013
Business Inventories (% chg) 0.2 0.2 0.1 0.5 1.3 3.7 3.9
 Retail 0.5 0.5 -0.1 5.5 5.3 3.1 7.4
  Retail excl. Motor Vehicles 0.2 0.3 -0.2 2.9 4.1 2.6 4.8
 Merchant Wholesalers 0.3 0.2 0.7 0.2 1.9 6.5 4.0
 Manufacturing -0.1 -0.1 -0.1 -3.7 -2.6 1.8 1.0
Business Sales (% chg)
Total 1.2 0.3 0.8 -0.6 -2.6 2.8 2.9
 Retail 0.9 0.1 1.4 2.6 1.6 3.9 3.8
  Retail excl. Motor Vehicles 1.0 0.2 1.0 2.9 0.2 3.2 2.6
 Merchant Wholesalers 1.9 0.7 0.8 -0.4 -4.3 3.6 3.1
 Manufacturing 0.7 0.1 0.4 -3.5 -4.4 1.2 2.1
I/S Ratio
Total 1.39 1.40 1.40 1.37 1.38 1.31 1.29
 Retail 1.50 1.50 1.50 1.46 1.46 1.43 1.41
  Retail excl. Motor Vehicles  1.27 1.28 1.28 1.27 1.27 1.24 1.23
 Merchant Wholesalers 1.33 1.35 1.36 1.32 1.32 1.21 1.18
 Manufacturing 1.35 1.36 1.36 1.35 1.36 1.31 1.30
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