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 5/11/07 For Mar 2007 | ||||||||||||
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Highlights
Business inventories eased in March for the biggest month-to-month decline in not quite two years, down 0.1 percent and well below a 1.4 percent jump in business sales that dropped the stock-to-sales ratio to a very lean 1.27.
Inventories among retailers, the largest category and the new data in today's report, fell 0.7 percent with sizable declines posted in nearly all categories.
In data already reported, factory inventories rose 0.2 percent while wholesale inventories rose 0.3 percent.
The drop in March retail inventories is good news given today's soft report on retail sales, indications that suggest excess merchandise isn't stacking up on store shelves. Markets showed no reaction to the results.
Business inventories growth slowed to a 0.3 percent rise in February, and was just under a 0.4 percent rise in sales and kept the stock-to-sales ratio unchanged at 1.29. Most of the deceleration in inventory growth was due to a drop in auto dealer inventories.
Business inventories Consensus Forecast for March 07: +0.4 percent
Range: 0.0 to +0.4 percent
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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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