The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $363.7 billion, an increase of 0.4 percent (±0.5%)* from the previous month, and 3.6 percent (±0.5%) above August 2009. Total sales for the June through August 2010 period were up 4.7 percent (±0.3%) from the same period a year ago. The June to July 2010 percent change was revised from +0.4 percent (±0.5%)* to +0.3 percent (±0.2%).
Let's take a look at the underlying data:
Click for a larger image.
I've blocked out the areas that decreased, which fall in three primary categories: autos, furniture and electronic stores. In other words -- anything related to big durable goods purchases.
However,
On a real (inflation-adjusted) basis, sales were stagnant.
From the Census:
The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers' shipments for July, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,090.0 billion, up 0.7 percent (±0.2%) from June 2010, and up 9.2 percent (±0.5%) from July 2009.More from Bloomberg:Inventories. Manufacturers' and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,375.7 billion, up 1.0 percent (±0.1%) from June 2010 and up 2.4 percent (±0.4%) from July 2009.
A big inventory build may be underway in what is a new and uncertain factor for the economy. Business inventories, up 1.0 percent in July, rose significantly for a second month and outpaced sales for a second month. The build is broad: up 1.3 percent at wholesalers, up 1.0 percent at manufacturers, up 0.7 percent at retailers. The build for retailers is skewed by a second straight giant build at auto dealers. Full lots at dealers are probably going to become a big problem given the weakness in auto sales in today's retail sales report for August.
Bloated inventories are not yet a problem for the economy but could become a problem if economic growth fizzles out. Outside of car dealers, today's retail sales report was mostly upbeat for August meaning that excess inventory isn't a risk right now for that sector. Note however that early indications on September retail sales, including in today's Redbook report, point to no better than flat sales for September. Inventories do appear to be heavy in the wholesale sector where sales are flat. Data in the ISM report for August hint at the risk of unwanted build in the manufacturing sector.
7 comments:
The Inventory to Sales ratio came in at 1.26....It made an alltime low of 1.23 in April 2010. During
the period of 2003 to 2007 this ratio averaged 1.30...with a high of 1.37 and a low of 1.25
The Inventory to Sales ratio came in at 1.26....It made an alltime low of 1.23 in April 2010. During
the period of 2003 to 2007 this ratio averaged 1.30...with a high of 1.37 and a low of 1.25
Redundant don't you think???
in the dictionary under redundant, it says, "see redundant"
I realize the concern about bloated inventories, but couldnt the inventory increase be a sign that the economy was stronger than previously thought in the beginning of the 3rd quarter? I mean, doesnt this add to economic growth?
"I realize the concern about bloated inventories, but couldnt the inventory increase be a sign that the economy was stronger than previously thought in the beginning of the 3rd quarter? I mean, doesnt this add to economic growth?"
The increase in inventories could mean that retailers aren't selling anything. Look at how inventories increased during 2008...
Bloomberg: "Outside of car dealers, today's retail sales report was mostly upbeat for August"
Health and personal care stores continue to sell. Perhaps we'll another wave of expansion for companies like Bath and Body Works or Sephora LOL. Besides gas stations and grocery stores benefitting from inflation, the only good news was in back to school apparel, but even that was because of heavy discounting. The author, and Bonddad, also must acknowledge that spending is currently only as good as stable because the govt keeps handing out progressively higher and higher amounts of cash to Americans to spend. The Federal govt issues bonds, the Federal Reserve buys a large percentage of them directly or indirectly, and the Federal govt hands out the cash to citizens, and those citizens spend the money at retail stores. In the meanwhile, corporations keep outsourcing the production of the goods citizens buy. Profit margins continue to hit all time highs but the jobs don't come back and GDP doesn't go up because the imports subtract back nearly all the GDP growth. Right now we continue on the path to assured destruction. It is completely unsustainable, no matter how large the allotments of US treasury sales become. The path of the economy continues to be down.
1.) Bloomberg: "Outside of car dealers, today's retail sales report was mostly upbeat for August"
Nice selective quote. In 2008 no one foresaw the depth of the slowdown.
2.) Health and personal care stores continue to sell. Perhaps we'll another wave of expansion for companies like Bath and Body Works or Sephora LOL.
Actually, if you look at the data, we saw increases across the board in the numbers. The chart from the report is contained in the post.
3.) The author, and Bonddad, also must acknowledge that spending is currently only as good as stable because the govt keeps handing out progressively higher and higher amounts of cash to Americans to spend.
Actually, the increased wealth effect from an increase in equities along with the increased personal savings rate are also issues here. You might also want to look at the charts from the BLS of average weekly earnings in 1982-1984 dollars, which have been increasing for the last year.
4.) The Federal govt issues bonds, the Federal Reserve buys a large percentage of them directly or indirectly, and the Federal govt hands out the cash to citizens, and those citizens spend the money at retail stores. In the meanwhile, corporations keep outsourcing the production of the goods citizens buy.
Again, I would strongly suggest you read Modern Money Mechanics - you really don't know anything about monetary policy. It's even a free publication.
5.) Profit margins continue to hit all time highs but the jobs don't come back and GDP doesn't go up because the imports subtract back nearly all the GDP growth.
Isn't it a good thing that companies are making money?
Regarding employment, the primary problem is the loss of construction and manufacturing jobs, which account for over half of the job losses from this recession. Of course, we could actually solve that problem through infrastructure investment.
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