U.S. Business Inventories Continue to Rise
Summary
- Inventories continue to increase across most sectors.
- Sales rose slightly in August following a July decline.
- Inventory-to-sales ratio remains at its highest in nearly two years.
Total business inventories rose 0.8% (18.2% y/y) in August following a 0.5% (18.3% y/y) rise in July. A 0.9% gain had been expected in the Informa Global Markets Survey. Business sales rose 0.3% (12.6% y/y) following a decline of 1.0% (12.5% y/y) during July. The inventory-to-sales ratio rose to 1.33, its highest level since February of last year, up from 1.32 in July and from its low of 1.26 in November 2021.
Retail inventories increased 1.3% (21.5% y/y) in August, following a 1.0% rise in July. Motor vehicle inventories jumped 3.5% (23.6% y/y), following a same monthly gain of 3.5% in July. Retail inventories excluding motor vehicles rose 0.6% (20.8% y/y) in August, after a 0.3% rise in July. Building materials inventories rose 0.9% (20.1% y/y) after a 1.3% jump in July. General merchandise inventories increased 0.2% (28.6% y/y) in August after a 0.4% rise in July. Food & beverage inventories jumped 1.7% (13.6% y/y) in August after a 0.3% gain the month prior, and clothing inventories rose 1.3% (28.4% y/y) following a 1.0% decline in July.
Wholesale inventories posted a 1.3% (25.0% y/y) jump in August on top of a 0.6% rise in July, while factory inventories edged down 0.1% (8.9% y/y) following an unchanged reading in July.
Wholesales sales edged up 0.1% (16.1% y/y) in August, following a drop of 1.5% in July. Factory shipments rose 0.5% (12.2% y/y) after declining 0.9% in July. Retail sales rose 0.2% (9.1% y/y) in August after a 0.4% decline in July. Retail sales edged down a preliminary 0.1% (7.8% y/y) in September. Retail sales excluding motor vehicles declined 0.5% (9.7% y/y) in August following a 0.1% rise in July.
The slight rise in the overall inventory-to-sales ratio in August was led by the wholesale sector, where the I/S ratio rose to 1.31 from 1.29 in July. The retail I/S ratio increased to 1.24 from 1.23 in July, the highest level since February 2021. Excluding motor vehicle inventories, the retail I/S ratio rose to 1.17, following three consecutive months at 1.16. The factory I/S ratio edged down to 1.46 in August from 1.47 in July.
The manufacturing and trade data are in Haver's USECON database. The Informa Global Markets forecast is in the MMSAMER database.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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