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Friday, December 11, 2015

Business Inventories Unchanged In October

Businesses appear to be putting the brakes on inventories which however are still rising a bit relative to sales. Business inventories were unchanged in October with September revised down 2 tenths to plus 0.3 percent in readings that will pull down the GDP outlook slightly. Sales came in unchanged which is just enough to drive up the stock-to-sales ratio to 1.38 from 1.37. This time last year, this reading was at 1.31.

All three components show only the most minimal change in inventories, up 0.1 percent for retailers and down 0.1 percent for both manufacturers and for wholesalers. And sales tell the story, unchanged in October for both retailers and wholesalers and down 5 tenths for manufacturers.

The lack of punch in the economy, the result of weak foreign demand, continues to put upward pressure on inventories. But businesses are successfully keeping their stocks as low as possible, thereby limiting future corrections in production and employment.


Recent History Of This Indicator:
Business inventories are widely considered to be too heavy relative to sales, posing risks to future production and also to future hiring. Inventories rose 0.3 percent in the September report, against no change for sales in a mismatch that drove the inventory-to-sales ratio up one notch to 1.38, well up from 1.31 in September last year. Forecasters see inventories rising 0.1 percent in October.

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