Business Inventories Decline In April

Tim Quinlan Wells Fargo

Business inventories fell 0.2 percent in April after rising 0.2 percent in March, marking the end of five months of modest gains. Inventories declined in April even though business sales were flat on aggregate.

Inventories Fall in April

Business inventories declined in line with expectations after increasing each month since last October. The reversal was largely on the trade side, with retail inventories down 0.2 percent while wholesalers’ inventories declined 0.5 percent. Manufacturers’ inventories inched 0.1 percent higher.
Motor vehicles and parts inventories rose in recent months, as sales had softened.

Businesses Steadily Managing Stockrooms

The total business inventory-to-sales ratio has remained at 1.37 for the past five months, suggesting inventories are roughly keeping pace with slower growing demand. One exception is auto dealers, where inventories fell 0.4 percent in April, perhaps signaling the start of a needed correction.
Inventories will need to rebound solidly in May and June in order to provide a meaningful boost to Q2 GDP growth.

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Author

Tim Quinlan

Wells Fargo

Tim Quinlan is an economist for Wells Fargo. Based in Charlotte, N.C., he provides analysis and commentary on U.S. business spending as well as macroeconomic developments in foreign economies.

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