University Of Michigan Confidence Remains Near Low of Year in September / Business Inventories Rising

The preliminary September U. of Michigan consumer confidence survey improved very marginally to 83.8 from 83.4 the prior month, which was also the low for the past year. Future expectation rose slightly to 74.4 from 73.7, but perceptions of current conditions weakened to 98.3 from 98.4. Inflation expectations softened to 3.1% over the next year from 3.2% last month, but five year inflation expectations rose to 3% from 2.9%.

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Business inventories rose more than expected, increasing +.5% MoM (consensus +.3%) in July, following a +.4% rise in June. Higher stockpiles indicate reduced need for new production, especially with retail sales slowing.

Retail inventories, which represent about a third of all business inventories, jumped 1% MoM. Auto dealer inventories rose +2.9% MoM, their largest surge in over a year. Furniture and grocery stores also showed rising inventories, while only general merchandisers indicated a decline.

The inventory to sales ratio fell to 1.26 totally due to a decline in the manufacturing inventory to sales ratio. The I/S ratio for retailers and wholesalers held steady from last month.