The Manufacturing, Trade, Inventories & Sales for April 2010 is out. Sales were down, -0.9% and inventories up 0.1% for the month. For manufacturers sales were down -1.3%, for retailers down -1.2%. Merchant wholesalers had a 0.3% rise in business sales.
Below is a graph of the sales to inventories ratio. As you can see the ratio has become less volatile in comparison to earlier in this recession. The inventory to sales ratio represents only a 1.24 months supply of inventories, given the current sales rate. Businesses are simply keeping on hand what they believe they can sell.
Inventory breakdowns were manufacturers, -0.4%, retailers +0.3% and wholesalers +0.5%. Below is the last 5 years of total business inventories raw.
Below is a graph of raw total business inventories, zeroing in on Q4 2009 to present. While we see an increase, we do not have that dramatic rate of change this month.
Here is the monthly percentage change.
In both Q4 2009 GDP as well as Q1 2010 GDP, the change in inventories and the rate of that change is what created positive GDP growth. Inventory changes were 64% of Q4 2009 GDP growth and 69% for Q1 2010 GDP.
While one might see some spin on these numbers, notice the declining sales rate this month and the low inventories growth rate, implying businesses do not foresee a sudden increase in future sales. Bottom line, expect weak GDP numbers, especially considering the other economic indicators including today's retail sales. The inventory roller coaster free ride appears to be over. We're not seeing other areas, such as exports, PCE (consumers buying stuff) or investment taking up the slack on GDP. Also see the trade deficit report. This too implies weaker Q2 2010 GDP.
Here is last month's report