US April business inventories rose 0.5%, matching expectations for a 0.5% increase.
The report rarely moves markets. However, it is a key part of GDP data and can give an early signal on how the second quarter is developing.
The Manufacturing and Trade Inventories and Sales report gives a broad view of stock levels across the economy. It combines retail, wholesale, and manufacturing data into one report. Meanwhile, it arrives about six weeks after the end of the month, so it tends to lag the retail sales release.
US April Business Inventories in Focus
Only the retail part is new when the full report comes out. The wholesale and manufacturing figures are already public by then. In addition, the data are seasonally adjusted but not deflated, so price changes can affect the dollar totals.
A key measure in the report is the inventories-to-sales ratio. That figure shows how many months of stock businesses hold relative to demand. Therefore, it can give a clearer signal than the raw inventory total.
Through March, total business inventories reached $2,709.7 billion. That was up 0.9% from the prior month. However, the inventories-to-sales ratio fell to 1.32 from 1.38 a year earlier.
March Data Show Leaner Stock Levels
That pattern suggests sales grew faster than inventories. As a result, businesses were holding leaner stock levels than a year earlier. The source said that points to less risk of a forced destocking drag and supports future production.
Within the report, wholesale inventories rose 1.3% on the month and 2.9% from a year earlier. Meanwhile, the wholesale inventories-to-sales ratio stood at 1.21, down from 1.30 a year earlier. The source said that also supports the view that inventory positions remain lean.
For GDP, inventory investment can be a volatile swing factor. Therefore, lean stock levels argue against an inventory-led growth scare.
You can access our other news on Forex markets and global market developments here.
