A burst of sales brought down inventories relative to sales in the wholesale sector during August. Sales in the sector, showing wide strength and including special strength for autos, jumped 0.9 percent for the strongest increase since February. The gain in sales, however, does come against an easy comparison as sales had fallen in the three prior months which was the worst streak of the recovery. The decline in sales had been backing up inventories but not in August as the inventory-to-sales ratio, after three straight increases, fell to 1.20 vs July's 1.21. Inventories in August rose 0.5 percent which is the first time since April that the rise in sales exceeded the rise in inventories.
Previously released inventory data for August show a back-up in inventories in the manufacturing sector. And prior data for retail show a back-up in this key sector. But more recent anecdotal data on inventories, including the ISM reports on manufacturing and non-manufacturing, show easing pressures as orders and production improve. The business inventory report on Monday will include data on retail and will round out August's data.