The 0.2% U.S. business inventory rise
The 0.2% U.S. business inventory rise in August after a flat (was flat) July figure tracked estimates, leaving a 1.0% six-month rise since February after a 0.5% drop over the prior five months. Analysts saw a 0.6% rise in retail inventories that slightly beat the 0.5% figure from the advance indicator report, alongside an already-reported 0.2% rise for factories and a 0.2% wholesale drop that undershot the -0.1% advance figure. Analysts still expect Q2 GDP growth of 2.5% with a tiny $1 B inventory add that leaves an $8 B liquidation rate, after a $50.2 B Q2 subtraction. Analysts discuss the massive five-quarter inventory downswing through Q2, and flat Q3 performance, in our September 26 commentary. Risk for the 2016 economy can be seen in the lofty inventory-to-sales (I/S) ratio, though analysts saw a drop to 1.39 over the three months ending in August from 1.40 in April and May and a 1.41 expansion-high over the three months of Q1. Analysts expect a further drop to 1.38 by October.