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Economy in Brief

U.S. Business Inventories Continue to Accumulate as Sales Firm
by Tom Moeller  August 15, 2017

Total business inventories increased 0.5% in June (2.8% y/y), the strongest increase since November. Retail inventories gained 0.6% (3.3% y/y), the same strong rate as in May. Motor vehicle & parts inventories jumped 0.7% (7.4% y/y). Retail inventories excluding autos rose 0.5% (1.2% y/y). Furniture inventories held steady (0.3% y/y). General merchandise inventories rose 0.7% (-2.2% y/y) and apparel inventories eased 0.2% (-0.9% y/y). Wholesalers' inventories gained 0.7% (2.8% y/y), while factory inventories rose 0.2% (2.2% y/y).

Business sales increased 0.3% (4.3% y/y). Retail sales improved 0.3% (3.4% y/y), while excluding autos, sales held steady. Wholesale sector sales increased 0.7% (5.5% y/y) . Factory sector shipments moved 0.2% lower (+4.1% y/y).

The business sector inventory-to-sales ratio rose to 1.38, the highest level since November. The retail I/S ratio held steady at 1.48 and has been trending near that level for a year. The 1.24 ratio excluding autos was down from 1.26 one year ago. The auto sector ratio remained elevated at 2.25. The furniture sector ratio of 1.55 was down sharply versus 2010, nearly the lowest level of the economic expansion. The general merchandise ratio of 1.40 was down following a back-up late in 2015; it has been trending down sharply since the mid-1990s. The apparel sector's I/S ratio of 2.42 was the lowest since August. The wholesale sector ratio of 1.29 was down sharply versus its early-2016 high and the factory sector ratio has been moving sideways since late last year.

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

Manufacturing & Trade Jun May Apr Jun Y/Y 2016 2015 2014
Business Inventories (% chg) 0.5 0.3 -0.2 2.8 2.3 1.8 3.4
 Retail 0.6 0.6 -0.2 3.3 3.8 4.7 3.0
  Retail excl. Motor Vehicles 0.5 0.2 -0.2 1.2 1.8 3.8 2.6
 Merchant Wholesalers 0.7 0.6 -0.4 2.8 2.5 1.2 5.8
 Manufacturing 0.2 -0.2 0.0 2.2 0.8 -0.1 1.6
Business Sales (% chg)
Total 0.3 0.1 0.0 4.3 -0.1 -3.2 2.8
 Retail 0.3 -0.0 0.4 3.4 2.7 1.9 4.0
  Retail excl. Motor Vehicles 0.0 -0.3 0.4 2.6 2.3 0.4 3.3
 Merchant Wholesalers 0.7 -0.1 -0.3 5.5 -0.5 -4.9 3.6
 Manufacturing -0.2 0.3 0.0 4.1 -2.0 -5.8 1.3
I/S Ratio
Total 1.38 1.37 1.37 1.40 1.40 1.38 1.31
 Retail 1.48 1.48 1.47 1.48 1.48 1.45 1.43
  Retail excl. Motor Vehicles 1.24 1.24 1.23 1.26 1.27 1.26 1.23
 Merchant Wholesalers 1.29 1.29 1.28 1.32 1.33 1.32 1.21
 Manufacturing 1.38 1.37 1.38 1.40 1.41 1.39 1.31
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