Business inventories rose 0.2% for the month.
Bloomberg Econoday calls this a “favorable position“, noting the “lean 1.39” inventory-to-sales ratio.
Let’s investigate the claims with a look at the Econoday comments followed by series of updated charts.
Inventories swung into a favorable position at the end of the second quarter, up only 0.2 percent in lagging data for June which is far below a 1.2 percent jump in sales. The mix pulls down the stock-to-sales ratio one notch to a lean 1.39. Leading a 0.5 percent rise in retail inventories are auto inventories where a 0.9 percent increase may not prove that excessive given what proved to be a very strong July for auto sales. Wholesale inventories rose 0.3 percent in June while inventories at manufacturers, a sector where demand is soft, slipped 0.1 percent for a second straight month to ease the risk of overhang. Inventory data look well balanced going into third quarter, a quarter when demand (this morning’s retail sales report notwithstanding) is expected to prove strong.
Above emphasis in italics is mine.Questioning “Favorably Lean”
As we have seen, the retail sales number came in anything but strong. For details, please see Retail Sales “Solidly” Flat.
Total Business: Inventory to Sales Ratio
Retailers: Inventory to Sales Ratio
Merchant Wholesalers: Inventories to Sales Ratio
Manufacturers: Inventories to Sales Ratio
Figments of Imagination
Favorably lean inventories are the figment of a rather strong imagination.
Mike “Mish” Shedlock