Business Inventories Stay In Check

Businesses are keeping their inventories in check amid slow sales. Inventories rose only 0.2 percent in May following April's even leaner 0.1 percent rise. Sales in May also rose 0.2 percent keeping the inventory-to-sales ratio unchanged at 1.40, which is a little less lean than this time last year when the ratio was at 1.37.

Retail inventories did rise an outsized 0.5 percent in May in a build, however, that looks to be drawn down by what proved to be very strong retail sales in June. Manufacturing inventories fell 0.1 percent in May with wholesalers up 0.1 percent.

Year-on-year, total inventories are up 1.0 percent which looks fat against what is a 1.4 percent decline in sales. With Brexit now in play, businesses are certain to keep ever tightening control over their inventories, a factor that will keep down current GDP growth but will help the outlook for employment and future GDP.

Recent History Of This Indicator:
Despite the slow economic pace, business inventories have been kept in check by tight management. And forecasters see no tangible rise in May, at a consensus plus 0.1 percent.