The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Nov Business Inventories rose .4% m/o/m, .1% more than expected and Oct was revised up by .2% to a gain of .4%. The two months in a row of gains follow 13 straight months of declines and remains the key basis and starting point for the economic recovery theme. Because sales rose 2%, the inventory/sales ratio fell to 1.28 from 1.30, the lowest since July ’08. Retail Auto and parts inventories rose .1% and are now up for a 3rd straight month while still remaining down 24.2% y/o/y. Wholesale inventories which we saw last week, rose by 1.5% and make up 25ish% of today’s figure. Retail general merchandise inventories fell .4% and are down 5 straight months and follows what we heard in the Beige Book yesterday that retail store inventories remain lean. Overall, the slowing in the rate of inventory reductions (still down 10.9% y/o/y) will continue to add to GDP and the bridge to actual increases will ultimately depend on the direction of end demand.