Inventories Rose in February, Retail Sales Slipped in March

This morning, the Census Bureau reported that inventories rose in February (this data lags by one month), however a 0.4% bump in sales kept the inventory-to-sales ratio steady. Specifically, the total business, which includes manufacturing, retail, and wholesale, inventory-to-sales ratio stood at 1.35.

Inventories at wholesalers and retailers remain too high, but the problem is now manageable. High inventory levels benefit the overall GDP figure but mean softer freight levels for our industry.

Also the Census reported that retail sales fell for the second straight month in March. This figure declined 0.2% from the previous month. Both January and February were revised downwards. Excluding autos and gasoline, sales were actually up 0.1%.

Autos, gas stations, restaurants, and building material sales took the bulk of the hit, with most other sectors posting gains. This weak consumer spending for the first quarter is likely temporary. Positive movement in employment and income should spur consumption. Compared with the same time last year, retail sales were up 5.2%.

Earlier this week, the Bureau of Labor Statistics announced that the Producer Price Index (PPI) for March slipped 0.1%. The PPI measures prices that producers receive for there products or services. March is most likely a blip as rising commodities prices should push the PPI higher in the months ahead.

Related, the Consumer Price Index (CPI), which measures prices that consumers pay for goods and services, fell 0.3% in March. Gasoline and wireless telecom took the biggest hits, down 6.2% and 7%, respectively. For the first quarter as a whole, this index is up 2.5% from the same time last year. Consumer prices should edge their way higher through 2017.

SOURCE: ATA Economic Update 04/14/17