Business Inventories Unchanged, Sales Surge

Business inventories were unchanged in September while sales however, tied largely to hurricane effects at the retail level, surged 1.4 percent. The mismatch pulls the inventory-to-sales ratio down 2 notches to 1.36 vs a long run at 1.38 and compared against a fat looking 1.40 in September last year.

With retail sales surging 2.1 percent in this report, retail inventories are especially lean, down 0.9 percent and largely reflecting autos where inventories fell 2.4 percent during the post-hurricane replacement surge of September. Wholesale inventories rose 0.3 percent in the month. against a 1.3 percent jump in sales, with manufacturer inventories up 0.7 percent against a 0.8 percent sales rise.

The lack of auto inventories among retailers will filter back through both the wholesale and manufacturing sectors which will have to rebuild their auto inventories. But autos are only one factor. The general need to build inventory to meet demand looks to be an increasing strength for the economy
.

Recent History Of This Indicator:
Business inventories have been climbing in line with the solid pace of economic growth. But after August's exceptionally strong 0.7 percent build, inventories in September are expected to rise only 0.1 percent.