Inventories Build While Sales Lag for January


Business sales were down and inventories were up for January, according to a Commerce Department report (link opens in PDF) released today. Overall sales dropped a seasonally adjusted 0.3% to $1.269 billion, while inventories pushed up 1% to $1.642 billion. Market analysts had expected a slight 0.5% increase after December's revised 0.3% bump.

Inventories growth has managed to outstrip sales growth over the past year, as well. Business inventories have grown 5.6% in the last 12 months, compared to 2.9% for sales. The largest month-to-month adjusted increase (2.8%) came from general merchandise stores, but a 1.9% jump in "motor vehicle & parts dealers" was the key driver behind January's inventory increase.

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales fell and inventories rose from December to January, the inventories/sales ratio also rose, to 1.29, compared to the previous month's 1.28 value. The January 2012 ratio was 1.26.



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