Headlines show final business sales data (retail plus wholesale plus manufacturing) improved. However, the rolling averages declined. Inventories remain very elevated. Inflation-adjusted growth is in contraction.

Analyst Opinion of Business Sales and Inventories

Inventories remain at recessionary levels. Our primary monitoring tool - the 3-month rolling averages for sales - declined again but remains in expansion. As the monthly data has significant variation, the 3-month averages are the way to view this series. Overall business sales are better than the low point in 2015 - but over the last 6 months growth is trending down.

Econintersect Analysis:

• the unadjusted sales rate of growth decelerated 1.1 % month-over-month, and up 1.2 % year-over-year
• unadjusted sales (but inflation-adjusted) down 1.3 % year-over-year
• unadjusted sales three-month rolling average compared to the rolling average 1 year ago decelerated 0.2 % month-over-month, and is up 2.1 % year-over-year.

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• unadjusted business inventories growth rate was unchanged month-over-month (up 5.0 % year-over-year), and the inventory-to-sales ratio is 1.36 which is recessionary.

US Census Headlines:

• seasonally adjusted sales up 1.6 % month-over-month, up 3.7 % year-over-year (published 2.4 % last month).
• seasonally adjusted inventories were up 0.0 % month-over-month (up 5.0 % year-over-year), inventory-to-sales ratios were up from 1.36 one year ago - and are now 1.37.
• market expectations (from Econoday) were for inventory growth of 0.0 % to 0.5 % (consensus +0.1 %).

The way data is released, differences between the business releases pumped out by the U.S. Census Bureau are not easy to understand with a quick reading. The entire story does not come together until the Business Sales Report (this report) comes out. At this point, a coherent and complete business contribution to the economy can be understood.

Today, Econintersect analyzed advance retail sales for April 2019. This is final data from the Census Bureau for March 2019 for manufacturing, wholesale, and retail (see graphs below):

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Business Sales - Unadjusted - $ millions

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Many analysts pay particular attention to inventories in this report. Inventories are expressed as a ratio to sales. The current situation suggests the economy was contracting as inventories are growing.

Seasonally Adjusted Business Inventories Year-over-Year Change - Inventory Value (blue line, left axis) and Inventory-to-Sales Ratio (red line, right axis)

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The takeaway from the above graph is that overall inventories rate of growth is increasing. The above graph is the headline view of inventories. Econintersectuses unadjusted data to look at inventories. The graph below shows the growth or contraction of the inventory-to-sales ratio year-over-year. When the graph below is above zero, inventories are building faster than sales.

Unadjusted Inventory-to-Sales Year-over-Year Change

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Caveats On Business Sales

This data release is based on more complete data than the individual releases of retail sales, wholesale sales, and manufacturing sales. Backward revisions are slight - and it is unusual that the revisions would cause a different interpretation of trend analysis.

The data in this series is not inflation adjusted by the Census Bureau - Econintersectadjusts using the appropriate BLS price indices relative to the three data series.

• CPI less shelter for retail sales
• PPI subindex OMFG for manufacturing
• PPI subindex PCUAWHLTRAWHLTR for wholesale sales

As in most US Census reports, Econintersect questions the seasonal adjustment methodology used and provides an alternate analysis. The issue is that the exceptionally large recession and subsequent economic roller coaster has caused data distortions that become exaggerated when the seasonal adjustment methodology uses more than one year's data. Further, Econintersect believes there is a New Normal seasonality and using data prior to the end of the recession for seasonal analysis could provide the wrong conclusion.