Global| Apr 18 2019U.S. Business Inventories and Sales Growth Slows in February
Summary
Total business inventories increased 0.3% (4.9% year-on-year) during February, after a slightly upwardly-revised 0.9% gain in January. Total business sales edged up 0.1% (2.4% y/y) following a 0.3% rise. The inventory-to-sales (I/S) [...]
Total business inventories increased 0.3% (4.9% year-on-year) during February, after a slightly upwardly-revised 0.9% gain in January. Total business sales edged up 0.1% (2.4% y/y) following a 0.3% rise. The inventory-to-sales (I/S) ratio stood at 1.39 for the third consecutive month. Business inventory swings can have a meaningful impact on GDP. In the second and third quarters of 2018 changes in inventories subtracted 1.2 percentage points and then added 2.3 ppt respectively. In Q4, inventories provided just a 0.1 percentage point boost.
Retail inventories increased 0.3% (4.3% y/y) in February after a 0.8% gain. Auto inventories, which comprise roughly 35% of retail inventories, grew 0.3% (8.6% y/y) Non-auto retail inventories rose 0.4% (1.9% y/y). General merchandise inventories, the second largest sector, declined 0.2% both for February and from a year ago. The troubled department store sector – a subset of general merchandise – saw inventories down 0.3% (-6.2% y/y); inventories plummeted a record 5.3% in November 2018 (data goes back to 1992) and have not recovered. Factory sector inventories gained 0.3% (3.6% y/y). As reported yesterday, wholesale inventories were up 0.2% (6.9% y/y).
Retail sales declined a downwardly-revised 0.3% in February (+1.9% y/y) with non-auto sales also down 0.3% (+2.0% y/y). Note: the advanced retail sales data for March was released today showing a 1.7% jump (3.5% y/y). Wholesale sector sales increased 0.3% (2.1% y/y), while shipments from the factory sector rose 0.4% (3.3% y/y) after four consecutive monthly declines.
The inventory-to-sales ratio in the retail sector edged up to 1.48 in February. The non-auto I/S ratio ticked up to 1.21 slightly above the historic low of 1.17 reached in November 2018 (data goes back to 1967). The wholesale and factory sector I/S ratios were unchanged at 1.35 and 1.36 respectively.
The manufacturing and trade data are in Haver's USECON database.
| Manufacturing & Trade | Feb | Jan | Dec | Feb Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Business Inventories (% chg) | 0.3 | 0.9 | 0.8 | 4.9 | 4.9 | 3.4 | 1.7 |
| Retail | 0.3 | 0.8 | 1.1 | 4.3 | 4.2 | 2.4 | 4.1 |
| Retail excl. Motor Vehicles | 0.4 | 0.7 | 1.3 | 1.9 | 1.2 | 2.2 | 1.9 |
| Merchant Wholesalers | 0.2 | 1.2 | 1.1 | 6.9 | 7.1 | 3.3 | 1.9 |
| Manufacturing | 0.3 | 0.5 | 0.1 | 3.6 | 3.5 | 4.5 | -0.7 |
| Business Sales (% chg) | |||||||
| Total | 0.1 | 0.3 | -0.9 | 2.4 | 6.1 | 5.6 | -0.8 |
| Retail | -0.3 | 0.8 | -1.8 | 1.9 | 4.7 | 5.0 | 2.5 |
| Retail excl. Motor Vehicles | -0.3 | 1.6 | -2.5 | 2.0 | 5.4 | 5.0 | 2.0 |
| Merchant Wholesalers | 0.3 | 0.5 | -0.7 | 2.1 | 6.6 | 6.7 | -1.3 |
| Manufacturing | 0.4 | -0.3 | -0.2 | 3.3 | 6.8 | 5.0 | -3.2 |
| I/S Ratio | |||||||
| Total | 1.39 | 1.39 | 1.39 | 1.36 | 1.36 | 1.38 | 1.42 |
| Retail | 1.48 | 1.47 | 1.47 | 1.45 | 1.44 | 1.47 | 1.49 |
| Retail excl. Motor Vehicles | 1.21 | 1.20 | 1.21 | 1.21 | 1.20 | 1.24 | 1.28 |
| Merchant Wholesalers | 1.35 | 1.35 | 1.34 | 1.29 | 1.29 | 1.30 | 1.35 |
| Manufacturing | 1.36 | 1.36 | 1.35 | 1.36 | 1.35 | 1.37 | 1.41 |
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
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