April Business Inventories

Updated 11-Jun-09 10:09 ET

About this release

Highlights

Key Factors

Big Picture

Business inventories include wholesale inventories, manufacturing inventories, and retail inventories. Inventories are a component of GDP, and thus are of interest to economists, but the financial markets don't pay much attention to this release. Over the long term, the inventory-to-sales ratio has been declining, due to improving techniques for inventory management. Lately, the ratio has increased as sales have fallen faster than inventories. Inventories are likely to decline over the near term to bring the ratio back into line with company desires. Inventories will rise once sales pick up.

Category	APR	MAR	FEB	JAN	DEC
Inventories	-1.1%	-1.3%	-1.4%	-1.2%	-1.5%
Manufacturers	-1.0%	-1.2%	-1.3%	-1.1%	-1.9%
Retailers	-1.0%	-0.9%	-1.2%	-1.6%	-1.2%
Wholesalers	-1.4%	-1.8%	-1.7%	-0.9%	-1.2%
Sales	-0.3%	-1.8%	0.0%	-1.3%	-3.4%
Manufacturers	-0.2%	-1.8%	-0.5%	-2.6%	-3.3%
Retailers	-0.3%	-1.3%	0.3%	1.7%	-3.5%
Wholesalers	-0.4%	-2.4%	0.2%	-2.4%	-3.5%
Inventory/Sales	1.43 mo	1.44 mo	1.44 mo	1.46 mo	1.46 mo
Manufacturers	1.45 mo	1.46 mo	1.45 mo	1.46 mo	1.44 mo
Retailers	1.54 mo	1.55 mo	1.54 mo	1.57 mo	1.62 mo
Wholesalers	1.31 mo	1.32 mo	1.31 mo	1.34 mo	1.32 mo

Release Details

Business Inventories

Importance (A-F): This release merits a C-.
Source: The Census Bureau of the Department of Commerce.
Release Time: 08:30 ET around the 15th of the month (data for two months prior).
Raw Data Available At: http://www.census.gov/mtis/www/current.html.

The business inventories report includes sales and inventory statistics from all three stages of the manufacturing process (manufacturing, wholesale, and retail). But by the time it is released all three of its sales components and two of its inventory components have already been reported. Because retail inventory is the only new piece of information it contains, the market usually ignores the business inventories report.

However, sometimes retail inventories swing enough to change the aggregate inventory profile. This may affect the GDP outlook. When it does, the report can elicit a small market reaction.

The aggregate sales figures are dated and they say little about personal consumption. They are actually a good coincident indicator, but the market is far more interested in forward-looking statistics.

The inventory-to-sales (I/S) ratio measures the number of months it would take to deplete existing inventory at current sales rates. A relatively low (high) I/S ratio may mean that manufacturers will have to build up (draw down) inventory levels. Depending on the strength of final demand and the degree to which recent inventory changes have been intended or unintended, this can have an effect on the industrial production outlook. Note that this information is much more useful to market economists than it is to other market participants.

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