Business Sales Fall Sizable 0.6%; Inventories Weak with Last Month Revised Lower

As a follow-up to today's weak retail sales report (see Autos and Restaurants Positive in Overall Weak Retail Sales Report; Last Month's Sales Revised Lower), today's business inventory and sales report is downright anemic, also with negative revisions.

Bloomberg Econoday offers these comments on business inventories.

There's evidence of economic weakness coming from inventory data where inventories are being kept down but are still building relative to sales. Business inventories were unchanged for a second month in August while sales fell a sizable 0.6 percent, driving up the inventory-to-sales ratio to 1.37 from 1.36.

Inventory downscaling is underway in manufacturing which is being hurt by weak exports. Manufacturing inventories fell 0.3 percent in both August and July against a major sales decline of 0.7 percent in August and a 0.2 percent dip in July. There's less inventory downscaling, at least right now, among wholesalers where inventories rose 0.1 percent but sales at wholesalers are even weaker, down 1.0 percent in the month. Retail, the third component, is not immune with sales down 0.1 percent but inventories up 0.3 percent.

Inventories are looking heavy which could limit production and employment growth and could emerge as a new concern for the doves at the Fed.

It's not just the doves who will have concerns over today's reports.

By the way, note the very lagging nature of these business reports. It's October 14, and we are just now discussing business inventories and sales for August.

Mike "Mish" Shedlock