U.S. Business Inventories Posted Another Solid Rise in January

Total business inventories rose 1.1% m/m (11.4% y/y) in January on top of a 2.4% m/m jump in December and monthly gains above 1% in both October and November. A 1.1% gain had been expected in the Informa Global Markets Survey. Business sales rebounded 3.7% m/m (15.5% y/y) in January following a 0.5% m/m decline in December. With sales rising faster than inventories in January, the inventory-to-sales ratio fell from 1.29 in December to 1.25 in January, just 0.01 above the all-time low of 1.24.

As had been the case in December, the January increase in inventories was broadly based and led by a 2.0% m/m (6.1% y/y) increase in retail inventories on top of a 4.7% m/m surge in December and a 2.0% rise in November. In the retail sector, general merchandise store inventories posted the largest monthly increase, rising 5.1% m/m in January top of a 4.3% jump in December. Clothing store inventories rose 4.0% m/m, their fifth consecutive solid monthly increase. Inventories at building materials and garden supplies stores increased 3.3%m/m, building on a 3.8% m/m gain in December. Furniture and appliance store inventories gained 2.0% m/m after a 5.6% m/m jump in December, and auto inventories were up 2.4% m/m. Auto inventories have risen 14.1% over the three months to January. Wholesale inventory growth in January moderated to 0.8% m/m from 2.6% m/m in December. Factory inventories rose 0.7% m/m in January following a 0.4% m/m increase in December.

Led by a 5.7% m/m rebound in retail sales in January, total business sales increased 3.7% m/m following a 0.5% m/m decline in December. The rebound reflected a 6.9% m/m jump in auto sales, a 5.4% m/m gain in furniture and appliance store sales, a 4.5% m/m rise in general merchandise store sales and a 2.7% m/m increase in sales at building supply and garden supply stores. In a separate release this morning, it was reported that retail trade sales were unchanged in February while retail trade sales excluding autos slipped 0.2% m/m in February. In January wholesale sales climbed 4.0% m/m, their strongest monthly gain since March 2021, after a 0.8% m/m rise in December. Manufacturing sales posted a 1.2% m/m gain in January, their largest monthly gain in three months.

With the rise in total sales outpacing the rise in inventories, the overall inventory-to-sales ratio fell from 1.29 in December to 1.25 in January, just 0.01 above the all-time low of 1.24 last reached in October 2021. The retail I/S ratio declined to 1.13 from 1.17. It had reached an all-time low of 1.07 in October 2021. The wholesale I/S ratio declined from 1.24 in December to 1.20 in January, tying the lowest reading since July 2014. The manufacturing I/S ratio edged down to 1.45 in January, its lowest since May 2019, from 1.46 in December.

The manufacturing and trade data are in Haver's USECON database.