The 0.4% U.S. November business inventory rise
The 0.4% U.S. November business inventory rise after flat readings in October (was -0.1%) and September tracked estimates, with a 0.1% retail inventory rise that matched the increase from the advance indicator report. Analysts saw the already-reported gains of 0.4% for factories and 0.8% for wholesalers released earlier, with a wholesale gain that beat a 0.7% advance increase. Analysts left our Q4 GDP growth estimate at 2.8%, with a $17 B Q4 inventory subtraction that leaves a lean $21 B accumulation rate, after a 3.2% GDP growth rate in Q3 with a $33.0 B inventory contribution. Inventories have been slow to recover from the 2015-2016 petro-hit despite a factory recovery, though analysts did see a temporary inventory bounce in Q3. The inventory-to-sales (I/S) ratio is now falling sharply, to 1.33 in November from 1.34 (was 1.35) in October, 1.36 in September, and 1.38 over the three months through August, versus a 1.42 expansion-high over the three months of Q1 in 2016. Yet, the ratio is still well above the 1.27-1.31 ratios between May of 2012 and September of 2014 before the big oil price hit, and is certainly well above the 1.24 floor seen in March of 2011.