Business Inventories Remain On Heavy Side

The nation's inventories remain slightly on the heavy side, up an as-expected 0.1 percent in July vs a 0.1 percent gain in sales that leaves the stock-to-sales ratio at 1.36, substantially higher than 1.29 a year ago.

Retail inventories rose 0.6 percent in July with the build, however, centered in vehicles which is positive given the strength, evident in this morning's retail sales report, of strong consumer demand for vehicles. Excluding vehicles, retail inventories rose a manageable 0.2 percent. Building materials rose 0.6 percent which may be a problem given weakness for this component in the August retail sales report. The stock-to-sales ratio for retail is unchanged at 1.46.

Stock-to-sales ratios in the report's other two components, in previously released data, are also unchanged, at 1.35 for manufacturers and 1.30 for wholesalers.

Though a bit heavy, inventories right now don't look to be a make-or-break factor for production or employment.

Recent History Of This Indicator:
Inventory overhang, which is moderate, is expected to ease with business inventories forecast to rise only 0.1 percent in July. Prior data for the factory and wholesale sectors showed stable conditions in July.