Business inventories fell 0.2% a bit more than the Econoday consensus estimate of a 0.1 percent decline.
The news on the second quarter continues to darken as business inventories fell 0.2 percent in April which is 1 tenth below Econoday’s consensus. Inventories at retailers also fell 0.2 percent with wholesale inventories down a very sharp 0.5 percent. Factory inventories were positive but only barely, at 0.1 percent. Declining inventories are a possible signal of business caution and a certain negative for second-quarter GDP.
Business Inventories
Why Shouldn’t Inventories Sink?
Retail sales in May declined 0.3 percent. Weakness was across the board. So, why should businesses be cautious about inventories?
For further discussion of retail sales, please see Retail Sales Dive (And It’s Not Just Autos)
Second Quarter Reality
- Business Inventories Sink (And Why Shouldn’t They?)
- Retail Sales Dive (And It’s Not Just Autos)
- Wholesale Trade Report Worse Than Expected: 2nd Quarter Recovery Thesis Nearly Dead
- Factory Orders a 2nd Quarter Disappointment: “High-Flying” Regional Nonsense
- Payrolls “Unexpectedly” Weak, Negative Revisions, Earning Poor: What Happened?
- Trade Deficit Widens: Cascade of Bad News Accelerates, Trump Will Howl
- Construction Spedding: Construction Spending Falls Sharply, March Revised Higher: Construction Spending Mysteries
- Motor Vehicle Sales: Motor Vehicle Sales Flat, Hope Turns to Second Half: What About Fleet Sales? Incentives?
- April Durable Goods shipments down 0.3%, new orders down 0.7%: April Durable Goods: Yet Another Weak Second-Quarter Report
- Wholesale Inventories: Down 0.3% in April. March revised lower from 0.2% to 0.1%.Retail Inventories: Down 0.3% in April. March revised lower from 0.5% to 0.3%. For details, please see Fed Eyes Second Quarter Recovery, Expects Trump Fiscal Policy Will Expand Economy
- Trade deficit in April widens by 3.8% with exports down and imports up: Trade Deficit Widens, Exports Weak: Economists Miss the Mark
- Tax Receipts: Federal Tax Receipts Running Below Expectations
- April New Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: Spring Housing Flop: Existing Home Sales Decline 2.3 Percent, Inventory Issues Persist
- April Housing Starts: About that Strong April Recovery: Housing Starts and Permits Flop, March Revised Lower
- April Empire State Manufacturing Survey: Empire State Manufacturing Survey Turns Negative: Welcome News?
- April Retail Sales: Sales were at least positive (+0.4%), but they were well under economists projections: Retail Sales Disappoint Again: Department Stores Clobbered in 2017
Yellen Still Clueless?
Retail sales aside, jobs, aside, all miserable data aside, the Fed will hike today.
Ignoring my typo of “id” instead of “is” here is the question of the day.
Repeating my warning issued twice before, last on June 10.
Mike “Mish” Shedlock
repost –
Retail sales about to be what expected after poor auto sales.
The interesting report today was business inventories. Expected was -0.1% … actual -0.2% … but, as usual, the story in the revisions.
Inventories with large upward Q1 revisions. March Inventories / sales revised from 1.35 to 1.37.
Inventories prior to this report
January … $1.832335 billion
February … $1.836877 billion
March … $1.840832 billion
Inventories with this report
January … $1.850185 billion
February … $1.855129 billion
March … $1.858322 billion
Will help on Q1 GDP revisions, but likely quite bad for Q2 as business pares.
March sales revised much lower.
$1.360993 billion —> $1.351861 billion … with almost all of it in the manufacturing sector
March
https://www2.census.gov/mtis/historical/mtis1703.pdf
April (today)
https://www.census.gov/mtis/www/data/pdf/mtis_current.pdf
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The Fed looted the economy to pay for their earlier mistake… keeping interest rates too low and encouraging too much borrowing.
Every industry has excess capacity, so only a stupid fool (or a socialist) would be dumb enough to borrow even more to expand capacity.
And then we are supposed to build, or even maintain, inventory levels? For whom? Anyone with savings had them looted by the criminals on the FOMC!!! Why build inventories for people with no money to buy?
Or are we supposed to build inventories to give away to mentally unstable people who voted for Bernie Sanders? The ones who demand free shit forever? They think stealing from productive people is somehow a “human right”?
Socialism is destroying America, and zero interest rates just made things worse
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What about personal responsibility?? I read that the average person has less than $1000 in the Bank BUT the new ‘normal’ now is 72 month car loans that are rolled over into a new loan every three years (because most people want to have the newest), Cable & Internet bill that is now over $200 a month then all the other crap including the high priced food product that chain restaurants serve but its all the governments fault right??
Note, the 35 year downtrend in interest rates & gas prices the lowest on record inflation adjusted (except in 2008) is what fueled the economic boom from 1983-2007 and the continuation from 2010 forward.
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Where in the Fed’s actions do you see anything about personal responsibility?
I see a bunch of academics making lame excuses for people who borrowed way too much, and further, the same group of academics then went and looted savings accounts of the responsible to bail out the irresponsible.
The Fed penalizes responsibility and rewards foolish money…
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you nailed brother. I am in retail and have zero interest in buying inventory with no orders coming in. The fed has made it too easy to leverage the worthless paper hangers and not real business. With todays rate hike, will see my business CC rate climb again.
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There sure was a lot of worthless stuff produced – still in inventory!
T-shirts emblazoned with mass-murdering Communists never sold in the years I spied them in one of the largest U.S. retailers… Never even saw a customer try them on, let along purchase one.
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Where exactly are you located? The economy in the NYC metropolitan region (the Tri State area) and Massachusetts is booming. Retail sales (especially auto sales, restaurants, & electronics ) are white hot. The UE rate in both the NYC metro region & greater boston is under 4%..
Here are the two top concerns of many business owners
1) Overwhelming demand for many consumer products (especially designer apparel ( electronics)
2) Virtualy no applicants for even jobs that pay in the low six figures now ( the majority of white collar jobs in NYC are now in the six figures.
$100,000 a year is the new $50,000 a year related to #2
So I am always wondering where in the country the economy is slowing because I read similar comments here – one person said he was in NW Arkansas and how the area has completely changed from some redneck rural area to more of the urban vibe you see in places like Austin TX, Greenwich CT & Westchester county in NY
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I thought NYC was dealing with a record number of homeless.
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We are drowning in homeless people — there are problems in Westchester County NY and in Greenwich CT right across the border.
But there are people who drive by in their leased mercedes and are driving so fast they can’t see them.
One can only guess that Mr Leeds is a trust fund baby, isolated from the real world
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The land of the wall street and political whore houses. Sucked the money out of the rest of the country.
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“The economy in the NYC metropolitan region (the Tri State area) and Massachusetts is booming. Retail sales (especially auto sales, restaurants, & electronics ) are white hot.”
…
Really?
You need to quit with the anecdotal. Unless you are peeking inside the till you have no idea how a business is doing. Crowds / traffic mean nothing if people are not spending … or not as much as previous.
From headlines I know CT having revenue problems. Took the time to look up NY. Their fiscal year 2018 started April 1st … with 2 months in the books how are revenue collections faring?
DOWN 9.5% over first 2 months of FY2017
https://www.tax.ny.gov/pdf/stats/collections/sfy17-18/may_2017_tax_collections.pdf
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http://www.economist.com/news/united-states/21719516-relatively-few-them-are-sleeping-rough-new-york-has-record-numbers-homeless
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Tax the productive, loot their savings, regulate them to death…
…use the stolen loot to subsidize the freeloaders.
Write a book about your exploits and collect at least $1 million in royalties.
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Today’s families are prisoners of their own clutter
https://www.bostonglobe.com/lifestyle/2012/07/09/new-study-says-american-families-are-overwhelmed-clutter-rarely-eat-together-and-are-generally-stressed-out-about-all/G4VdOwzXNinxkMhKA1YtyO/story.html
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The FED is going to shrink their MBS portfolio by $4B/month. Not to worry, I’m sure there are lots of banks willing to lend their own money for overpriced homes to fill the void.
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If the Fed is selling MBS to investors (and that is a big “if” because the Fed was very wishy washy on how the MBS were being reduced) — but if the Fed is selling MBS to investors, the Fed would theoretically record losses, which would (and should) be blamed on Bernanke and Yellen.
But they might also reduce holdings by not reinvesting principal paydowns, which is more likely because it allows Yellen (and Bernanke) to avoid taking responsibility. These people refuse to admit they were wrong.
Either way — encouraging people to save is a good thing. Save for a down payment, save for retirement, heck try saving so one has a rainy day fund.
Assuming that more debt is the answer to every question is crazy
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And supposedly (the official release is ambiguous) base on the talk afterward (not the release) — the Fed intends to not re-invest principal in the amount of $10 billion per month… or roughly 1/8th the speed of the QE they did per month to create the problem in the first place.
But that verbal whatever was rather wishy washy… they “will” (future tense) undo the mess they created at 1/8th the speed they created it… starting later. Hopefully. If they don’t have yet another excuse, or it they can’t find another way to defer blame to someone else.
Everyone has seen the wizard behind the curtain is just some clueless old bimbo who never managed to leave campus after graduating 500 years ago. No real world experience, no idea she was just there to take the fall for Bernanke’s mess.
Yellen is going to spend her last 7-8 months at the Fed trying to save face. She doesn’t know what she is doing and is terrified that everyone knows she doesn’t know what she is doing
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