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Business Inventories
Released On 10/15/2012 10:00:00 AM For Aug, 2012
PriorConsensusConsensus RangeActual
Inventories - M/M change0.8 %0.5 %0.2 % to 0.6 %0.6 %

Highlights
Business inventories are stable, rising a bit faster than business sales but, given strength in final consumer demand, are well balanced. Business inventories rose 0.6 percent in August vs a 0.5 percent rise for sales which keeps the inventory-to-sales ratio unchanged at 1.28.

The retail component for inventories also shows a 0.6 percent rise which is under the 1.3 percent rise in sales and cuts the sector's stock-to-sales ratio to 1.38 from 1.39. Today's very strong retail sales data for September point to another decline for the ratio in the next business inventories report.

Quarterly numbers are trending toward a slightly rising sequential build for the third quarter which is a positive for GDP growth. And this looks definitely to be a positive inventory build tied to expectations for continuing underlying growth in demand. Next hard numbers on inventories will be next week with the September durable goods report.

Market Consensus before announcement
Business inventories rose 0.8 in July versus a 0.9 percent rise for business sales which was the strongest rise of the year. The mix is slightly favorable for the stock-to-sales ratio which is down one tenth to a bit leaner level of 1.28.

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
 

 

2012 Release Schedule
Released On: 1/122/143/134/165/156/137/168/149/1410/1511/1412/13
Release For: NovDecJanFebMarAprMayJunJulAugSepOct
 


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