Inventories for February declined 0.1% but sales fell 0.4%.
The only reason the inventory-to-sales number did not rise further is January inventories were revised from +0.1% to -0.1%.
On the surface, the Bloomberg Econoday economists’ consensus estimate for inventories was right on the mark at -0.1% in a range of -0.2% to +0.2%.
However, revisions took January’s reading from +0.1% down to -0.1% so compared to the initial January reading, inventories are down -0.3% outside the range of estimates.
Highlights
Sales are falling but fortunately so are inventories which fell 0.1 percent in February vs a 0.4 percent decline for sales. The combination keeps the inventory-to-sales ratio, which has been trending higher, at 1.41.
Retail inventories rose a very steep 0.6 percent in February especially against a 0.2 percent decline for sales. Retail inventories of autos, where sales have been weak, rose 1.3 percent in the month to swell the inventory-to-sales ratio to 2.14 from 2.12. Inventories at both manufacturers and wholesalers fell in the month to keep ratios for these readings stable.
Retail inventories, given this morning’s weak retail sales report for March, may be a risk to the nation’s inventory outlook, especially for autos where inventory backup also points to trouble for factory production. Lower down the supply chain, however, sales and inventories are balanced, at least for now.
Recent History
Business inventories have been flat but not flat enough relative to sales which have been on the decline. The stock-to-sales ratio, at 1.40 in January, was the heaviest since 2009. Unwanted inventories are negatives for the production and employment outlooks. The consensus forecast is calling for a 0.1 percent dip for business inventories in February.
Inventories-to-Sales
GDPNow Forecast
As with today’s dismal retail sales report (see Retail Sales -0.3%; Autos Down 4th Month, Plunge -2.1%; Hooray Gasoline Up 0.9%) these numbers should subtract from first quarter GDP estimates.
These things are a tough read actually but I suspect today’s GDPNow forecast from the Atlanta Fed will dip to -0.3%.
We will find out shortly.
Mike “Mish” Shedlock
All eyes on QE4, what ever they decide to call it.
Ha,ha – the Atlanta Fed INCREASED their Q1 GDP forecast to 0.3%.
Apparently this is all “good news”, and the stock market loves it.
Everything has become “Enron” now.
January’s upward revision to inventories is a plus for GDP.
I wonder how many at the FED are trading stocks and bonds on Wall Street using “insider information?”
I don’t understand how data like this, is ignored by the stock market.
“The only reason the inventory-to-sales number did not rise further is January inventories were revised from +0.1% to -0.1%.”
True … BUT January adjusted inventories actually GREW. How so, you ask?
January inventories adjusted with initial report last month … $1.812265 trillion
January inventories adjusted revision with todays report … $1.813781 trillion
the downward revision made possible due to a large upward revision to December inventories.
December inventories revised in January report … $1.811272 trillion
December inventories revised (again) in today’s report …. $1.815881 trillion
This will upgrade Q4 GDP … but not in a good way
https://research.stlouisfed.org/fred2/series/BUSINV
Mish, there is a lot of discussion on the “net” about these FED meetings, meetings with the Pres. & VP, Bankers showing up for meetings this week. What gives?
There is an interesting discussion on that topic here:
http://thegreatrecession.info/blog/what-is-happening-to-banks/
Darn, they found my wiretaps