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Economy in Brief

U.S. Business Inventories Remain Unchanged; Sales Jump
by Tom Moeller  November 15, 2017

Total business inventories held steady (3.5% y/y) in September following a little-revised 0.6% August rise. Retail inventories declined 0.9% (+2.2% y/y) led by a 2.4% fall (+4.0% y/y) in motor vehicle inventories. Outside of the auto sector, retail inventories eased 0.1% (+1.2% y/y). Furniture & home appliance inventories rose 0.6% (1.9% y/y), but apparel inventories fell 0.3% (-1.3% y/y). General merchandise inventories were little changed (-1.9% y/y) for a second month. Merchant wholesale inventories increased 0.3% (4.6% y/y) while inventories in the factory sector rose 0.7% (3.6% y/y), the strongest of four monthly increases.

Total business sector sales jumped 1.4% (6.4% y/y) following a 0.8% August increase. Retail sales surged 2.1% (5.2% y/y) paced by an auto sales promotion. Vehicle sales jumped 4.6% (5.4% y/y). Nonauto sales strengthened 1.4% (5.2% y/y) after two months of moderate increase. Building materials sales surged 3.0% (11.4% y/y) while general merchandise store sales rose 0.3% (4.2% y/y). Furniture store sales rose 0.2% (1.3% y/y) and apparel store sale notched 0.1% higher (0.8% y/y). Wholesale trade sales surged 1.3% (8.5% y/y) and factory sector shipments improved 0.8 (5.3% y/y).

The inventory-to-sales ratio in the business sector eased to 1.36 from 1.38. It was the lowest ratio in nearly three years. The retail sector I/S ratio fell sharply to 1.44, pulled lower by the auto sector's sharp decline to the lowest level in nine months. The nonauto retail sector's I/S ratio also fell sharply and continued its decline from the early-2016 peak. A lower ratio in the general merchandise category has paced the decline, while apparel's ratio also has fallen precipitously. Working the other way, the furniture & home furnishing ratio rose to the highest level since February. The wholesales sector I/S ratio declined to the lowest level in nearly three years and the ratio in the factory sector held steady, depressed versus the 2016 high.

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

Manufacturing & Trade Sep Aug Jul Sep Y/Y 2016 2015 2014
Business Inventories (% chg) 0.0 0.6 0.3 3.5 2.3 1.8 3.4
 Retail -0.9 0.6 0.0 2.2 3.8 4.7 3.0
  Retail excl. Motor Vehicles -0.1 0.3 -0.1 1.2 1.8 3.8 2.6
 Merchant Wholesalers 0.3 0.8 0.6 4.6 2.5 1.2 5.8
 Manufacturing 0.7 0.6 0.4 3.6 0.8 -0.1 1.6
Business Sales (% chg)
Total 1.4 0.8 0.3 6.4 -0.1 -3.2 2.8
 Retail 2.1 -0.1 0.5 5.2 2.7 1.9 4.0
  Retail excl. Motor Vehicles 1.4 0.5 0.6 5.2 2.3 0.4 3.3
 Merchant Wholesalers 1.3 1.9 0.0 8.5 -0.5 -4.9 3.6
 Manufacturing 0.8 0.6 0.2 5.3 -2.0 -5.8 1.3
I/S Ratio
Total 1.36 1.38 1.38 1.40 1.40 1.38 1.31
 Retail 1.44 1.49 1.48 1.49 1.48 1.45 1.43
  Retail excl. Motor Vehicles 1.22 1.24 1.24 1.27 1.27 1.26 1.23
 Merchant Wholesalers 1.27 1.28 1.29 1.32 1.33 1.32 1.21
 Manufacturing 1.38 1.38 1.38 1.40 1.41 1.39 1.31
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