Retailers Ramp Up Inventory Levels as Demand Surges: A Positive Sign for the Economy

Published / Modified Jul 16 2024
Source: U.S. Census Bureau, CSIMarket Team / CSIMarket.com

Manufacturing and Trade Inventories and Sales: The restocking of retailers, accelerated in May

According to the latest economic report, U.S. total business end-of-month inventories for May 2024 were $2,558.5 billion, showing a 0.5% increase from the previous month.
On the other hand, total business sales remained relatively unchanged at $1,861.4 billion.
The surge in retail inventories was a key driver in the overall increase, with retailers stocking up their shelves in anticipation of higher demand.

The Commerce Department reported that U.S. retail inventories jumped to $797 billion in May from $791 billion in April, leading to a decrease in the inventory to sales ratio to 1.31.
This suggests that companies are experiencing increased demand for their goods, with inventory build-up particularly strong in building materials, food, and apparel retailers.

However, the build-up in inventories could also be a result of slowing demand or an anticipation of future demand growth.
Over the past 12 months, car dealers led the inventory build-up with an 18.1% increase, while overall inventories excluding motor vehicle and parts rose by 2.4%.
On the other hand, inventories excluding motor vehicle and parts saw a slight decline in May, primarily driven by falling inventories at furniture, home furnishing, electronic, and appliance stores.
The restocking of inventories outpaced the growth in retail sales, leading to a decrease in the inventory to sales ratio.

Overall, the report suggests that the restocking of retailers accelerated in May, indicating a positive outlook for future sales.
Companies are preparing for increased demand by ramping up their inventory levels, which could bode well for the overall economy.