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Business Inventories  
Released On 4/14/2009 10:00:00 AM For Feb, 2009
PriorConsensusConsensus RangeActual
Inventories - M/M change-1.1 %-1.0 %-1.5 % to -0.3 %-1.3 %

Highlights
Businesses are draining their inventories as fast as possible but they may have more work to do. Business inventories fell 1.3 percent in February against a 0.2 percent rise in business sales to shave two tenths off the stock-to-sales ratio to 1.43. This data again is for February. Early data for March, including this morning's very weak retail sales report, suggest that inventories, despite February's draw, may still be too fat.

Inventory data are released in three sections with retail inventories today's final piece. Retail inventories fell 1.2 percent in February vs. a 0.2 percent rise in sales. Today's retail sales report for March shows a 1.1 percent decline, meaning retailers may very well have seen their stocks build back up during the month. The other two previously released sections of the report show very similar results with manufacturers posting a 1.2 percent drop in inventories against a 0.1 percent fall in sales while wholesalers reported a 1.5 percent drop in inventories against a 0.6 percent rise in sales. Again, data for March point to decreases in sales that hopefully will be matched by decreases in inventories. Remember, bloated inventories may add to GDP but they lead to job losses and future production cuts.

Recent History Of This Indicator
Business inventories fell 1.1 percent in January, surprisingly in line with sales which fell 1.0 percent. Pulling inventories lower was destocking at retailers where inventories fell 1.7 percent, and particularly at auto dealers who cut inventories by 4.4 percent. We will likely see a decline in inventories in February as retail sales spiked 1.8 percent for the month and manufacturing inventories dropped 1.2 percent.

Definition
Business inventories are the dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an important indicator of the near-term direction of production activity. (Bureau of the Census)  Why Investors Care
 
[Chart]
Inventories tend to rise when economic conditions are strong; since sales are rising at the same time, the inventory-to-sales ratio may remain stable, or rise at a very slow pace. Inventories tend to drop when economic conditions are weak; since sales are falling at the same time, the inventory-to-sales ratio may remain relatively stable. The I-S ratio then begins to rise as sales fall more quickly than inventory growth.
Data Source: Haver Analytics
 
 

2009 Release Schedule
Released On: 1/142/123/124/145/136/117/148/139/1510/1411/1612/11
Release For: NovDecJanFebMarAprMayJunJulAugSepOct
 


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