Business Inventory Levels Stable In September

Inventory levels are steady though there is the risk of unwanted build should the economy begin to slow. Business inventories rose 0.2 percent in August in contrast to a 0.4 decline for business sales. Yet the mismatch isn't enough to the raise the stock-to-sales ratio which held at 1.29.

Today's report includes August inventory data from the retail sector where this morning's September sales report showed broad contraction. Retail inventories actually thinned in August on a total dollar basis and also relative to sales with the sector's stock-to-sales ratio dipping to 1.41 from 1.43. The stock-to-sales ratio for autos shows a sharp decline to 2.07 from 2.13 but this may reverse in the next report given weakness in the motor vehicle component of the September retail sales report.

Inventory growth is a positive for GDP calculations but unwanted growth is a negative for future production and employment.

Recent History Of This Indicator:
Business inventories growth in July was steady and in line with underlining sales growth in what was a solid positive for the economic outlook. Business inventories rose 0.4 percent in July versus a 0.8 percent rise in business sales that keeps the stock-to-sales ratio unchanged at a healthy and lean 1.29.