Business Inventories Swing Into Favorable Position

Inventories swung into a favorable position at the end of the second quarter, up only 0.2 percent in lagging data for June which is far below a 1.2 percent jump in sales. The mix pulls down the stock-to-sales ratio one notch to a lean 1.39. Leading a 0.5 percent rise in retail inventories are auto inventories where a 0.9 percent increase may not prove that excessive given what proved to be a very strong July for auto sales. Wholesale inventories rose 0.3 percent in June while inventories at manufacturers, a sector where demand is soft, slipped 0.1 percent for a second straight month to ease the risk of overhang. Inventory data look well balanced going into third quarter, a quarter when demand (this morning's retail sales report notwithstanding) is expected to prove strong.

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 June, at a consensus plus 0.1 percent.