Business inventories are on the rise. Today’s report from the Commerce Department showed that the month of August’s business inventories rose by 0.6% for the month. This was versus what was expected to be a 0.5% gain by Bloomberg and also by Dow Jones, and was also versus a gain of what was 0.8% in July.
While this is an August report, it is just that much more confirmation that business inventories are building faster than they are moving out the door. The inventory-to-sales ratio remained flat at 1.28. Business inventories are the dollar amount of inventories held by manufacturers, wholesalers and retailers, and this is an economic indicator of the near-term direction of production activity.
Inventories rose to a seasonally adjusted figure of $1.602 trillion, while sales rose to a seasonally adjusted $1.247 trillion. The report showed that motor vehicle and parts dealers saw large gains, with the ex-auto component showing that inventories rose everywhere else on average by about 0.2%. Two other key gains were noticed in furniture stores and in building materials.
The hope today will be that this morning’s retails for September indicates that businesses were able to lighten up on their inventories.
JON C. OGG
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