US August business inventories +0.4% vs +0.4% expected

Prior was +0.8%Retail inventories ex-autos vs +0.8% priorFor background, the US business inventories report, formally the Manufacturing and Trade Inventories and Sales release, is published monthly by the Census Bureau about six weeks after the reference month ends. It combines inventory and sales data from three sectors: manufacturers, wholesalers and retailers. Together they cover the bulk of goods held in the US economy.By the time the report is released, much of it is already known. Manufacturing inventories come out earlier in the factory orders report. Advance estimates for wholesale and retail inventories arrive in the Advance Economic Indicators release roughly four weeks after month end. Business inventories completes the picture, adding the final retail figures and the combined total, which is why it rarely moves markets.The key figures are the monthly change in total inventories and the inventory-to-sales ratio, which measures how many months it would take to sell existing stock at the current pace of sales. A rising ratio can signal weakening demand or deliberate stockpiling. A falling ratio suggests lean shelves and the potential need to restock.The report’s main value is for GDP tracking. Changes in private inventories are one of the most volatile components of quarterly growth and can swing the headline number by a percentage point or more. Economists use the monthly data, particularly retail inventories excluding autos, to refine their GDP estimates. The figures are in nominal dollars, so periods of rapid goods inflation can inflate inventory values without any change in physical stock.Inventory swings have taken on added importance in recent years as companies front-ran tariffs, rebuilt supply chains and adjusted to shifting trade policy, creating sharp distortions in the quarterly GDP figures. This article was written by Adam Button at investinglive.com.