Business Inventories Show Strength In April

The strength of April now includes business inventories where strong sales limited the build to only 0.1 percent. Business sales jumped 0.9 percent to pull the inventory-to-sales ratio, which had been climbing, down to 1.40 from 1.41. Retail inventories slipped 0.1 percent in April and aren't likely to build much at all in May given this morning's strength in the retail sales report. Factory inventories also slipped 0.1 percent with the May outlook to turn on tomorrow's industrial production report. The negative in April is in wholesale inventories which rose 0.6 percent. Inventory builds are only wanted when there's strength in sales which, though starting the year off slowly, may now be picking up.

Recent History Of This Indicator:
Business inventories have been subdued as businesses keep down stocks in a low sales environment. A 0.2 percent gain is expected for April inventories, one that may be especially small relative to business sales which will benefit from the month's strength in consumer spending.