Inventory Growth Rising, Though I/S Ratio Remains Low

September wholesale inventories, which account for approx. 25% of total business inventories, rose more than expected in September, increasing by +.8% MoM (consensus +.2%). In addition, August's figure was revised substantially higher to +.7% MoM from an originally reported +.1% MoM.

Sales rose +1.3% MoM in September, and increase from the +.8% pace the prior month. But when petroleum sales are eliminated, sales growth fell to +.4% MoM in September from +1.2% in August. Petroleum sales increased 7.7% during the month as prices rose and inventories fell.

The total inventory-to-sales ratio fell to 1.10, the lowest level in at least the past six months, due to the decline in petroleum supplies. Otherwise the I/S ratio rose for ex-petroleum and durable goods.

Factory inventories rose +.6%, the largest monthly gain in the past year. Automotive inventories rose 1% while sales rose 4.1% MoM in September. Durable goods inventories rose +.7% MoM while sales rose +.3% MoM. Non-durable inventories rose +1% MoM and sales rose +2.1% MoM. Stockpiles of farm products rose 9.6% MoM as crops are harvested. Computer sales fell -2.6% MoM and drug sales fell -2.9%.