U.S. Business Inventories Rose Modestly while Sales Rebounded in February
by:Sandy Batten
|in:Economy in Brief
Summary
- Inventories rose 0.2% m/m in February on top of a 0.3% m/m gain in January.
- February increase was led by wholesalers.
- Sales rebounded, rising 1.2% m/m, their largest monthly gain since July.
- With the rise in sales outpacing inventories, the inventory/sales ratio fell 0.7% m/m.
Total business inventories increased 0.2% m/m (2.1% y/y) in February after a 0.3% m/m gain in January. The Action Economics Forecast Survey had anticipated a 0.2% m/m rise. Manufacturing inventories edged up 0.1% m/m (0.9% y/y), their fourth consecutive monthly gain. Wholesale inventories rose 0.3% m/m (1.1% y/y) in February on top of a 0.8% m/m jump in January. Retail inventories edged up 0.1% m/m (4.5% y/y) in February, their first monthly gain in three months.
Drilling down into retail inventories, auto inventories rebounded slightly in February, inching up 0.1% m/m (7.8% y/y) following a 1.0% monthly decline in January. Though small, this was their first monthly increase in five months. Food and beverage inventories jumped 0.4% m/m (2.0% y/y) in February, their largest monthly gain since August. In contrast, furniture and appliance store inventories slumped 0.4% m/m (-3.6% y/y), their fourth monthly decline in the past five months. General merchandise store inventories slid 0.3% m/m (+3.0% y/y), their first monthly decline in four months.
Total business sales rebounded in February, rising a solid 1.2% m/m (+3.6% y/y) after a 0.6% monthly decline in January. Factory shipments (sales) rose 0.7% m/m (2.6% y/y) in February following a 0.5% m/m increase in January. Wholesale sales jumped 2.4% m/m (4.3% y/y), their largest monthly gain since March 2022, after a 0.9% m/m decline in January. Retail sales rose 0.4% m/m (3.7% y/y) in February after falling 1.2% m/m in January. In a separate report also released today, retail sales jumped 1.4% in March, led by strong auto sales. (Note that retail sales in the total business sales and inventories report do not include food service sales.)
With the gain in sales outpacing that in inventories in February, the inventory/sales (I/S) ratio fell 0.7% m/m to 1.35 in February from 1.36 in January. The February reading tied the December reading as the lowest since September 2023. The I/S ratio for wholesalers fell to 1.30, tied with December as the lowest reading since June 2022, from 1.32 in January. The retail I/S ratio was unchanged at 1.31 in February while the manufacturing I/S ratio edged down to 1.45 from 1.46.
The manufacturing and trade data are in Haver’s USECON database. The Action Economics Forecast Survey is in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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