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Economy in Brief

U.S. Business Inventories Steadily Accumulate; Sales Ease
by Tom Moeller  March 14, 2018

Total business inventories increased 0.6% (3.7% y/y) during January, the same as in December, revised from 0.4%. Total business sales fell 0.2% (+5.7% y/y), the first decline since last March. The changes in inventories and sales caused the inventory-to-sales ratio to rise modestly to 1.34. That remained, however, well below its 1.42 peak early in 2016.

Retail inventories increased 0.7% (2.3% y/y) after a 0.3% rise. Auto inventories rose 1.7% (2.2% y/y) following four straight months of decline. Nonauto retail inventories notched 0.1% higher (2.4% y/y) after three months of firm accumulation. Grocery store inventories increased 0.2% (4.4% y/y) after surging in the prior two months. Building materials inventories rose 0.5% (3.8% y/y) after a -0.7% rise. Clothing store inventories gained 0.3% (-0.8% y/y), only the second m/m increase since last March. General merchandise inventories rose 0.7% (-0.3% y/y) after a 0.2% decline. Furniture store inventories declined 0.5% (+2.1% y/y), the third decline in four months. As reported last week, wholesale inventories increased 0.8% (4.8% y/y) in January following a 0.7% rise. Also reported earlier, factory sector inventories rose 0.3% (4.0% y/y), matching the weakest rise since May.

Retail sales slipped 0.1% (+4.1% y/y) following a 0.2% decline, while nonauto sales improved 0.1% (+4.7% y/y) after a 0.2% decline. Wholesale sector sales declined 1.1% (+6.7% y/y) after a 0.8% rise, as shipments from the factory sector increased a steady 0.6% (6.1% y/y).

The inventory-to-sales ratio in the retail sector rose to 1.44, the highest level in four months, but down sharply from the 1.49 August high. The nonauto I/S ratio held steady at 1.21 and remained near its lowest level since early-2012. The wholesale sector I/S ratio rose to 1.26, its highest point since September. In the manufacturing sector, the I/S ratio held steady at 1.35, its lowest point in three years.

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

Manufacturing & Trade Jan Dec Nov Jan Y/Y 2017 2016 2015
Business Inventories (% chg) 0.6 0.6 0.4 3.7 3.4 2.2 1.8
 Retail 0.7 0.3 0.2 2.3 2.4 3.8 4.7
  Retail excl. Motor Vehicles 0.1 0.6 0.4 2.4 2.2 1.6 3.8
 Merchant Wholesalers 0.8 0.7 0.6 4.8 3.7 2.3 1.2
 Manufacturing 0.3 0.7 0.5 4.0 4.0 0.8 -0.1
Business Sales (% chg)
Total -0.2 0.5 1.4 5.7 6.1 -0.1 -3.2
 Retail -0.1 -0.2 0.8 4.1 4.8 2.6 1.9
  Retail excl. Motor Vehicles 0.1 -0.2 1.4 4.7 4.8 2.3 0.4
 Merchant Wholesalers -1.1 0.8 1.9 6.7 8.1 -0.6 -4.9
 Manufacturing 0.6 0.7 1.4 6.1 5.5 -2.0 -5.8
I/S Ratio
Total 1.34 1.33 1.33 1.37 1.38 1.40 1.38
 Retail 1.44 1.43 1.42 1.46 1.46 1.48 1.45
  Retail excl. Motor Vehicles 1.21 1.21 1.20 1.24 1.23 1.27 1.26
 Merchant Wholesalers 1.26 1.23 1.23 1.28 1.27 1.33 1.32
 Manufacturing 1.35 1.35 1.35 1.38 1.37 1.41 1.39
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