Business Inventories Unchanged in July as Sales Tick Down

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.