July 2015 Business Inventory Situation Seems To Be Improving

Econintersect‘s analysis of final business sales data (retail plus wholesale plus manufacturing) shows unadjusted sales slumped compared to the previous month – but there was only a slight degradation of the rolling averages. With inflation adjustments, business sales are in contraction. The inventory-to-sales ratios remain at recessionary levels – but inventory levels are improving.

Econintersect Analysis:

unadjusted sales rate of growth decelerated 2.7 % month-over-month, anddown 2.9 % year-over-year

unadjusted sales (inflation adjusted) down 1.4 % year-over-year

unadjusted sales three month rolling average compared to the rolling average 1 year ago decelerated 0.1% month-over-month, and is down 2.5% year-over-year.

Unadjusted Business Sales – Unadjusted (blue line), Unadjusted but Inflation Adjusted (red line), and 3 month rolling Average (yellow line)

unadjusted business inventories growth decelerated 0.4% month-over-month (up 2.5 % year-over-year with the three month rolling averages unchanged), and the inventory-to-sales ratio is 1.4 which is at recessionary levels (well above average for this month). However, these ratios may be distorting the real picture as inventory values may not be properly revalued for inflation (first in, first out).

US Census Headlines:

seasonally adjusted sales up 0.1 % month-over-month, down 2.7 % year-over-year (it was down 2.5 % last month).

seasonally adjusted inventories were up 0.1 % month-over-month (up 2.6 % year-over-year), inventory-to-sales ratios were up from 1.29 one year ago – and are now 1.36.

market expectations (from Bloomberg) were for inventory growth of 0.0 % to 0.5 % (consensus 0.1 %) versus the actual of +0.1 %.

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.