Businesses added to their stockpiles for a 17th consecutive month in May. But sales fell for the first time in nearly a year, a sign that many companies could be forced to trim supply levels if the economy weakens.Report Consistent With ISM
The Commerce Department says business supply levels grew 1 percent in May. Sales fell for the first time in 11 months. It was the worst showing for sales since June of last year.
May's rise in inventories pushed total stockpiles to $1.51 trillion. That's up more than 14 percent from the recent low of $1.32 trillion reached in September 2009, when businesses were slashing inventories to control costs in the wake of the deep recession.
Inventories rose at all levels of business. Stockpiles held by manufacturers rose 0.8 percent. Inventories held by wholesalers rose 1.8 percent.
Retailers only increased their stockpiles 0.4 percent. That small rise reflected a 0.7 percent increase in inventories of autos and auto parts and declines in inventories of furniture and building materials. Clothing stockpiles increased 1 percent and inventories of stores such as Wal-Mart and Macy's rose 0.5 percent.
The above report is consistent with the latest Manufacturing ISM numbers.
Please consider Manufacturing ISM Weaker Than it Looks; Digging Into the Numbers; Inventory Restocking Accounts for Much of the Rise
Manufacturing at a GlanceOther data shows an unmistakable slowing in the global economy.
click on chart for sharper image
Inventory Replenishment
For all the excitement over the 1.8 point rise, much of it is restocking inventories in the wake of the tsunami.
The PMI is an equally weighted composite of New Orders, Production, Employment, Supplier Deliveries, and Inventories (inputs to Manufacturing). Customer Inventories is tracked separately to add to the overall insights, but is not factored into the PMI.
The effect of inventories is 5.4 divide by five, or 1.08 (1.1) of the overall 1.8 rise as noted by Goldman Sachs.
Manufacturing Scorecard
- China on Verge of Contraction
- Germany 17-Month Low
- Europe 18-Month Low
- Italy, Ireland, Spain, Greece in Contraction
- US ISM Rises
I am sticking with my previously stated belief that the US ISM was an outlier.
"Manufacturers are gearing up following the Japanese tsunami, expecting a second-half revival that will not come."
Today's sales report suggests just that, as does this month incredibly weak jobs report.
- Retail Sales Laugh of the Day: "Falling Gas Prices Held Back Retail Sales"; Weakest Performance Since July 2010 ; Auto Sales Mirage
- Payroll Stunner Full "Pathetic" Jobs Report - Many Charts
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Posts
