U.S. Business Sales Edged Down While Inventories Were Unchanged in June
by:Sandy Batten
|in:Economy in Brief
Summary
- Retail inventories up 0.7% m/m while wholesale inventories fell 0.5% m/m.
- Total sales slipped with a small increase in retail and a bigger decline in wholesale.
- Total I/S ratio unchanged for third consecutive month but remained highest since June 2020.
Total business inventories were unchanged in June from May (+2.0% y/y). Upon revision, inventories were also unchanged in May (previously +0.2% m/m). The Informa Global Markets Survey had looked for a 0.2% monthly increase in June. The level of business inventories has been relatively stable since December. For all of Q2, inventories were up 0.1% q/q after having declined 0.2% q/q in Q1.
Total business sales edged down 0.1% (-3.1% y/y) in June, reversing a 0.1% monthly increase in May (revised down from 0.2% previously). For all of Q2, sales fell 1.1% q/q, their fourth consecutive quarterly decline. With very similar changes in both sales and inventories, the total inventory-to-sales (I/S) ratio was unchanged at 1.40 in June, remaining at the highest level since June 2020.
In June, the unchanged reading for total inventories reflected unchanged manufacturing inventories (-0.1% y/y), a 0.5% monthly decline in wholesale inventories (+1.3% y/y) and a 0.7% monthly jump in retail inventories (+5.3% y/y). The jump in retail inventories in June was led by a 1.5% m/m increase in motor vehicle inventories and a 0.8% m/m gain in general merchandise store inventories. By contrast, furniture inventories fell 1.2% m/m, clothing inventories declined 0.5% m/m and building materials inventories dropped 0.2% m/m.
The 0.1% monthly decline in total sales in June reflected a 0.1% m/m increase (-2.6% y/y) in factory shipments and a 0.2% m/m gain in retail sales (+0.5% y/y) that was offset by a 0.7% m/m decline (-6.7% y/y) in wholesale sales. Separately, this morning it was reported that retail sales increased a larger-than-expected 0.7% m/m in July with an upward revision to June (+0.3% m/m).
With sales and inventories little changed in June, the total I/S ratio was unchanged at 1.40, remaining at the highest level since June 2020 and up from 1.33 a year ago. The manufacturing I/S ratio was also unchanged at 1.49 in June. The wholesale I/S ratio edged up to 1.41 in June from 1.40 in May. And the retail I/S ratio was unchanged at 1.30, matching its high since May 2020.
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.
