Businesses Keep Inventories Tight As Sales Rise 0.2%

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Business sales are up while inventories stay steady, according to a June Commerce Department report (link opens a PDF) released today .

Seasonally adjusted sales increased 0.2% to $1,286 billion for June. A 0.8% boost in retail sales packed the most punch, followed close behind by a 0.4% increase from merchant wholesalers. After registering a 1% increase in May, manufacturers saw sales slump 0.4% in June.

In the past year a 6.2% increase in retail sales provided the primary drive for a 4.9% boost in total business sales. Manufacturing is up 3.2% in the past 12 months, while merchant wholesalers have managed a 5.6% increase.

As sales headed higher, inventories remained steady at $1,655 billion. Analysts had expected a 0.2% increase. While manufacturers and retailers expanded supplies by 0.1%, merchant wholesalers eased back 0.2% on their own inventories. In the past year, overall inventories are up 3.5%.

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales increased only slightly, and inventories stayed steady from May to June, the inventories/sales ratio remained at 1.29. The June 2012 ratio was 1.30.



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