U.S. Business Sales and Inventories Rose in May
by:Sandy Batten
|in:Economy in Brief
Summary
- Factory inventories up 0.2% so far in Q2, reversing 0.2% decline in Q1.
- Factory and retail sales up in May while wholesale sales fell for third consecutive month.
- Total I/S ratio unchanged but remained highest since June 2020.
Total business inventories rose 0.2% (3.5% y/y) during May on top of a 0.1% m/m gain in April, revised from 0.2% m/m. The gain matched expectations in the Informa Global Markets Survey. The level of business inventories has been relatively stable since December. However, the increases in April and May pushed inventories thus far in Q2 up 0.2% from the end of Q1, reversing the 0.2% decline in Q1.
Total business sales rose 0.2% m/m (-1.8% y/y) in May, their first monthly increase in four months. With sales and inventories rising the same, the total inventory-to-sales (I/S) ratio was unchanged at 1.40 in May, remaining at the highest level since June 2020.
In May, retail inventories rose 0.7% m/m (6.9% y/y) following a 0.3% monthly gain in April. The May increase was led by a 2.8% m/m jump in motor vehicle inventories. Inventories other than of motor vehicles fell 0.1% m/m in May. Inventories of furniture fell 1.2% m/m while inventories of building materials declined 1.0% m/m. Factory inventories slid 0.2% m/m (+0.5% y/y) in May, their third monthly decline in the past four months. Wholesale inventories were essentially unchanged in May (+3.7% y/y) after having fallen in both March and April.
The 0.2% m/m rise in total business in May sales reflected a 0.3% m/m increase (-1.9% y/y) in factory shipments, their first monthly increase in four months, a 0.4% m/m rise (+0.9% y/y) in retail sales and a 0.2% m/m drop (-4.0% y/y) in wholesale sales. Separately, this morning it was reported that retail sales increased 0.2% m/m in June with the May figure revised up to a 0.5% monthly gain.
With sales and inventories rising at the same pace, the total I/S ratio was unchanged at 1.40 in May, remaining at the highest level since June 2020 and up from 1.33 a year ago. The manufacturing I/S ratio slipped to 1.49 in May from 1.50 in April. The wholesale I/S ratio edged up to 1.41 in May from 1.40 in April. And the retail I/S ratio rose to 1.30, matching the high since May 2020, from 1.29 in April.
The manufacturing and trade data are in Haver’s USECON database. The Informa Global Markets forecast is in the MMSAMER 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.
