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2009 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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Business inventories are the dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an important indicator of the near-term direction of production activity. Why Investors Care
| Released on 9/15/05 For Jul 2005 | ||||||||||
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Highlights
July business inventories, in the sharpest drop in two years, fell 0.5% while sales soared 1.1%, driving the inventory-to-sales ratio down a sharp 3 tenths to a record low of 1.26. The ratio indicates that the inventories in the nation are very lean, a negative for GDP but otherwise a positive that points to higher rates of future production.
Retail inventories, the new data in the day's report, dropped 1.8% on a big 5.4% dip in autos. Excluding autos, retail inventories were unchanged. Note that vehicle sales in July were unusually strong due to a big incentive push. In August sales proved far less strong while auto production was gearing up, pointing to inventory rebuilding as the 2006 models roll out.
Wholesale inventories and factory inventories for July, previously reported, were down 0.1% and up 0.5% respectively. Note July's factory data incorporated annual revisions.
Auto incentives in June and July set off a series of distortions, one of which was the big drawdown in auto inventories. But Katrina poses new questions. Watch for clues on transportation snags or sudden shortages in the month's manufacturing reports, problems that could be heightened by thin inventories.
Business inventories were unchanged in June. In July, manufacturers' inventories rose 0.5 percent while wholesale trade inventories were down 0.1 percent. Retail trade inventories may show a drop due to the spurt in auto sales for the month.
Business inventories Consensus Forecast for July 05: 0.0 percent
Range: -0.5 to 0.3 percent
![[Chart]](chart.gif)
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Inventories tend to rise when economic conditions are strong; since sales are rising at the same time, the inventory-to-sales ratio may remain stable, or rise at a very slow pace. Inventories tend to drop when economic conditions are weak; since sales are falling at the same time, the inventory-to-sales ratio may remain relatively stable. The I-S ratio then begins to rise as sales fall more quickly than inventory growth. |
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