April 2017 Headline Business Inventories Declined

Econintersect‘s analysis of final business sales data (retail plus wholesale plus manufacturing) shows both unadjusted sales and inventories declined. This is in contrast to the headlines which showed sales unchanged and inventories declining.

Analyst Opinion of Business Sales and Inventories

This was worse month for business sales compared to last month – and inventories have returned to recession levels. Our primary monitoring tool – the 3 month rolling averages for sales – declined but remains in expansion. As the monthly data has significant variation, the 3 month averages are the way to view this series.

Econintersect Analysis:

unadjusted sales rate of growth decelerated 2.3 % month-over-month, and up 3.7 % year-over-year

unadjusted sales (but inflation adjusted) up 1.1 % year-over-year

unadjusted sales three month rolling average compared to the rolling average 1 year ago decelerated 2.7 % month-over-month, and is up 4.2 % year-over-year.

unadjusted business inventories growth rate decelerated 0.6 % month-over-month (up 2.4 % year-over-year with the three month rolling averages showing inventory growth now slowing), and the inventory-to-sales ratio is 1.29 which is above average for this month in normal times of economic growth).

US Census Headlines:

seasonally adjusted sales unchanged month-over-month, up 5.6 % year-over-year.

seasonally adjusted inventories were down 0.2 % month-over-month (up 2.3 % year-over-year), inventory-to-sales ratios were up from 1.42 one year ago – and are now 1.37.

market expectations (from Bloomberg / Econoday) were for inventory growth of -0.2 % to 0.3 % (consensus -0.1 %) versus the actual of -0.2 %.

The way data is released, differences between the business releases pumped out by the U.S. Census Bureau are not easy to understand with a quick reading. The entire story does not come together until the Business Sales Report (this report) comes out. At this point, a coherent and complete business contribution to the economy can be understood.