December Business Inventories

Updated 09-Mar-10 19:29 ET

Highlights

Business inventories declined 0.2% in December after increasing 0.5% in November.
The consensus estimate called for a 0.2% increase over the month.
Total sales rose 0.9% in December after increasing 2.4% in November.
The inventory/sales ratio fell from 1.27 to 1.26.

The decline in inventories should have been expected. Both the manufacturing and merchant wholesaler inventories data were released prior to today’s report and showed significant inventory declines.
The only new data in the report was the retail inventories figures, which showed zero growth. The consensus estimate called for retail inventories to increase by 1.4%.
The consensus disregarded the latest BEA inventories estimate found in the Q4 2009 GDP report. The BEA estimate showed retail inventories increased by 0.1%.

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. Inventories are likely to decline over the near term to bring inventory-to-sales ratios back into line with company desires. Inventories will rise once sales pick up.

Category	DEC	NOV	OCT	SEP	AUG
Inventories	-0.2%	0.5%	0.4%	-0.5%	-1.6%
Manufacturers	-0.1%	0.2%	0.4%	-1.3%	-0.9%
Retailers	0.0%	-0.2%	0.0%	0.5%	-2.6%
Wholesalers	-0.8%	1.6%	0.6%	-0.8%	-1.3%
Sales	0.9%	2.4%	1.4%	0.2%	1.1%
Manufacturers	1.9%	1.6%	1.5%	1.3%	-0.2%
Retailers	-0.1%	2.1%	1.3%	-2.2%	2.8%
Wholesalers	0.8%	3.6%	1.4%	1.3%	1.1%
Inventory/Sales	1.26%	1.27%	1.30%	1.31%	1.32%
Manufacturers	1.29%	1.32%	1.34%	1.35%	1.38%
Retailers	1.37%	1.37%	1.40%	1.42%	1.38%
Wholesalers	1.12%	1.14%	1.17%	1.17%	1.20%