Business Sales Growth Beats Out Inventories Growth
Business sales and inventories are both up, according to a February Commerce Department report (link opens as PDF) released today.
Seasonally adjusted sales increased 0.8% to $1,312 billion for February. Manufacturers managed the largest percentage growth, up 0.9% from January to February. Retailers and merchant wholesalers weren't far behind -- both pushed sales up 0.7%.
In the last year a 3.1% boost in merchant wholesaler sales provided the primary push for a 1.8% increase in total business sales. Manufacturing is up 0.8% in the last 12 months, while retailers have managed a 1.6% rise.
As sales increased, inventories expanded a seasonally adjusted 0.4% to $1,716 billion for February. Analysts had expected a larger 0.6% boost due in part to February's rough weather. . As with sales, manufacturers saw the biggest relative boost in inventories, up 0.7% from January. Retailer inventories stayed steady, which merchant wholesalers supplies increased 0.5%. In the last year, overall inventories are up an oversized 4.2%.
To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales and inventories both increased relatively similar absolute amounts from January to February, the inventories/sales ratio stayed steady at 1.31. That's significantly larger than February 2013's 1.28 ratio balance and is one reason why analysts were happy to see February 2014 sales increase at a faster rate than inventories.
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