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Economy in Brief

U.S. Business Inventory Accumulation Slows
by Tom Moeller  August 15, 2018

Total business inventories increased 0.1% (4.0% y/y) during June following two months of 0.3% increase. Total business sales increased 0.3% (8.2% y/y), following a 1.3% gain. The inventory-to-sales ratio rose to 1.35 from 1.34. It peaked early in 2016 at 1.43.

Retail inventories increased 0.1% (1.7% y/y) in June, following two months of 0.4% increase. Auto inventories eased 0.1% (+1.2% y/y) after a 0.9% rise. Non-auto retail inventories increased 0.2% (2.0% y/y) following a 0.1% uptick. General merchandise inventories fell 0.3% (-0.5% y/y) after a 0.2% gain. In the department store sector, inventories declined 0.5% (-3.1% y/y) following a 0.2% rise. Building materials inventories surged 1.5% (7.6% y/y) after a 0.5% increase, while clothing store inventories fell 0.2% (-0.7% y/y), down for the fourth straight month. Inventories of furniture, electronics and appliances declined 0.9% (-1.9% y/y), the fifth m/m decline this year. As reported last week, wholesale inventories edged 0.1% higher (5.1% y/y) following a 0.3% rise. Factory sector inventories also rose 0.1% (5.1% y/y) following a 0.2% gain.

Retail sales held steady in June (5.8% y/y) with non-auto sales easing slightly (+6.5% y/y) after a 1.2% jump. Wholesale sector sales slipped 0.1% (+10.2% y/y) after improving 2.1%. Shipments from the factory sector surged 1.0% (8.4% y/y) following a 0.6% rise.

The overall business inventory-to-sales (I/S) ratio rose to 1.35. In the retail sector, the ratio held steady at 1.43 in June, down sharply from the levels averaged during the prior two years. The non-auto I/S ratio was steady at 1.20, its lowest level since early-2012. The ratio peaked at 1.29 early in 2016. The wholesale sector I/S ratio was stable at 1.25, its lowest level since November 2014. The manufacturing sector I/S ratio declined to 1.33, its lowest point in three years.

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

Manufacturing & Trade Jun May Apr Jun Y/Y 2017 2016 2015
Business Inventories (% chg) 0.1 0.3 0.3 4.0 3.5 1.8 1.7
 Retail 0.1 0.4 0.4 1.7 2.4 4.1 4.9
  Retail excl. Motor Vehicles 0.2 0.1 0.2 2.0 2.3 1.9 3.9
 Merchant Wholesalers 0.1 0.3 0.1 5.1 3.6 2.2 1.2
 Manufacturing 0.1 0.2 0.4 5.1 4.5 -0.7 -0.8
Business Sales (% chg)
Total 0.3 1.3 0.6 8.2 5.8 -0.8 -3.4
 Retail 0.0 1.0 0.4 5.8 4.9 2.5 1.9
  Retail excl. Motor Vehicles -0.0 1.2 0.5 6.5 4.9 2.0 0.4
 Merchant Wholesalers -0.1 2.1 1.4 10.2 7.4 -1.3 -4.9
 Manufacturing 1.0 0.6 0.1 8.4 5.0 -3.2 -6.2
I/S Ratio
Total 1.35 1.34 1.35 1.39 1.38 1.42 1.39
 Retail 1.43 1.43 1.44 1.49 1.47 1.49 1.46
  Retail excl. Motor Vehicles 1.20 1.20 1.21 1.25 1.24 1.28 1.27
 Merchant Wholesalers 1.25 1.25 1.27 1.31 1.29 1.35 1.33
 Manufacturing 1.33 1.35 1.35 1.37 1.37 1.41 1.39
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