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Business Inventories  
Released On 10/14/2009 10:00:00 AM For Aug, 2009
PriorConsensusConsensus RangeActual
Inventories - M/M change-1.0 %-0.9 %-1.3 % to -0.5 %-1.5 %

Businesses in August were still burning through inventories, down 1.5 percent despite an increase of 1.0 percent for sales. Retail numbers are the new data in today's report showing a clunker-skewed 2.3 percent decline but a much smaller decline of 0.3 percent excluding autos. Strength for non-auto retailers in this morning's retail sales report points to the possibility of a build for retail inventories in September. September's ISM non-manufacturing report did in fact show a build for retailers in the month. The ISM's report on the manufacturing side showed what may prove to be pivotal shift in inventories for September, pointing to a possible build or at least a smaller rate of decline for factory inventories which, in data already released, fell 0.8 percent in August. Wholesale inventories were also already released showing a 1.3 percent drop.

Businesses have been cutting expenses to an extreme degree this recession, reflected not only in the drop for inventories but also in the labor-force drop. August was another month of destocking but new indications of sales improvement in the manufacturing sector and the non-auto retail sector hint that September may mark the bottom of the destocking cycle and the beginning of the restocking cycle.

Consensus Outlook
Business inventories fell 1.0 percent in July following a 1.4 percent draw in June. In contrast to inventories, business sales were up, 0.1 percent higher in July and adding incrementally to June's major 1.1 percent jump. Looking ahead, we are likely to see sizeable decline in business inventories for August. Factory inventories fell 0.8 percent in August while wholesale inventories dropped 1.3 percent.

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.  Why Investors Care
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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