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Business Inventories
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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. Why Investors Care
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| Released on
9/14/07
For
Jul 2007 |
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Inventories - M/M change
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| Actual |
0.5%
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| Previous |
0.4
%
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Highlights
Business inventories rose 0.5 percent in July, well below a 1.1 percent rise in business sales to push the stock-to-sales ratio down to 1.26 from 1.27. Retail inventories, the new data in the report, rose a sharp 1.0 percent reflecting a 2.9 percent jump at auto dealers. The rise in auto inventories during July is actually a plus given very strong auto sales in August. Excluding autos, retail inventories rose a moderate 0.2 percent.
Previously released data include moderate 0.2 percent gains for both wholesale and factory inventories. Today's data show that inventories were nice and lean going into the August slowdown.
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Trends
![[Chart]](chart.gif)
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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
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