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Economy in Brief

Business Inventories Unchanged in July as Sales Tick Down
by Carol Stone, CBE  September 15, 2016

Total business inventories decreased ever so slightly, -0.04% (+0.5% y/y), in July; June's 0.2% rise was unrevised. Total business sales slipped -0.2% (-0.8% y/y), pausing after June's 1.0% gain, which was revised from 1.2%.

Retail inventories went down 0.3% in July (+4.4% y/y), reversing a rise of 0.4% in June; that was revised from 0.5% reported before. Inventories excluding motor vehicles and parts dealers also fell 0.3% (2.9% y/y) following a 0.2% rise. Motor vehicle & parts inventories decreased -0.2% (+8.8% y/y), pausing after June's 0.8% advance. Food & beverage store inventories, which had gained 0.5% in June, revised from 0.7%, also paused in July (+2.6% y/y) at almost June's exact same level - that is, -$2 million. Inventories at building material & garden supply stores rose 0.6% (+4.3% y/y), continuing a modest up-and-down pattern of the previous few months. Inventories at other retailers decreased modestly in the latest month. Merchant wholesalers' inventories were also basically flat in July (+0.5% y/y) after June's 0.3% rise, as reported last weak, and manufacturers' inventories ticked up 0.1% (-2.9% y/y), also as reported earlier.

Total business sales, as noted, were down 0.2% in July (-0.8% y/y), somewhat a reaction to June's 1.0% gain. The decreases were widespread, with wholesalers off 0.4% (+2.9% y/y) after their sizable 1.7% advance in June. Factory shipments lost 0.2% (-3.0% y/y) after their 0.6% June gain. Total retail sales edged higher 0.1% (+2.0% y/y), but the segment excluding motor vehicles and parts saw sales down 0.4% (+2.9% y/y), with the declines spread across all major store groups.

The inventory-to-sales ratio was unchanged at 1.39 in July, its lowest level since November. The retail sector ratio moved down to 1.49 from June's 1.50, while the I/S ratio excluding autos was flat at 1.27, still the lowest since August 2015. Stocks at motor vehicle & parts dealers were lower relative to sales, at 2.23 in July versus 2.28 in June. Among durable goods outlets other than autos, stocks rose relative to sales, with furniture, appliances & electronics at 1.55 in July, up from 1.54, and building materials & garden supplies inventories at 1.84 months of sales, compared to 1.81 in June. The I/S ratio among nondurable goods outlets was mixed, with marginal movements across food, clothing, and general merchandise centers. Merchant wholesalers' I/S ratio moved up in July to 1.34 from 1.33 in June, and that at manufacturers was flat at 1.35.

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

Manufacturing & Trade Jul Jun May Jul Y/Y 2015 2014 2013
Business Inventories (% chg) -0.0 0.2 0.2 0.5 1.3 3.7 3.9
 Retail -0.3 0.4 0.5 4.4 5.3 3.1 7.4
  Retail excl. Motor Vehicles -0.3 0.2 0.3 2.9 4.1 2.6 4.8
 Merchant Wholesalers 0.0 0.3 0.2 0.5 1.9 6.5 4.0
 Manufacturing 0.1 -0.0 -0.1 -2.9 -2.6 1.8 1.0
Business Sales (% chg)
Total -0.2 1.0 0.3 -0.8 -2.6 2.8 2.9
 Retail 0.1 0.9 0.1 2.0 1.6 3.9 3.8
  Retail excl. Motor Vehicles -0.4 1.0 0.2 2.9 0.2 3.2 2.6
 Merchant Wholesalers -0.4 1.9 0.7 -1.0 -4.3 3.6 3.1
 Manufacturing -0.2 0.7 0.1 -3.0 -4.4 1.2 2.1
I/S Ratio
Total 1.39 1.39 1.40 1.37 1.38 1.31 1.29
 Retail 1.49 1.50 1.50 1.46 1.46 1.43 1.41
  Retail excl. Motor Vehicles 1.27 1.27 1.28 1.26 1.27 1.24 1.23
 Merchant Wholesalers 1.34 1.33 1.35 1.32 1.32 1.21 1.18
 Manufacturing 1.35 1.35 1.36 1.35 1.36 1.31 1.30
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