September Business Inventories Tepid

Date: November 25, 2016

Commerce Department Reports Virtually Flat Manufacturing And Trade Inventory Growth

According to the latest Commerce Department data, US manufacturing and trade inventories for September rose 0.1 percent, marking a slowdown from the 0.2 percent increase from August to September. The Washington Post reported that the Commerce Department says business inventories “edged up 0.1 percent in September, slower than the 0.2 percent gain seen in August.” Sales were up “a solid 0.7 percent, double the 0.3 percent rise in August.” The article characterizes the sales gain as evidence of a strengthening economy after a slow start to the year. The gain in business sales in September “was led by the 1 percent increase in retail sales followed by an increase of 0.8 percent in sales at the manufacturing level.” Sales by wholesalers increased 0.2 percent. According to Reuters, business inventories stayed largely flat in September “as stocks of goods at retailers were not as large as previously thought.” This flattening of inventory growth “could have implications for the third-quarter economic growth estimate,” which would show a broader picture of overall US economic health.

What This Means For Small Businesses

Small businesses in particular are likely to feel the effects of slow inventory turnover. The latest NFIB Small Business Economic Trends report reflected this, and the NFIB warned that “prospects for the fourth quarter are not promising,” in part because “inventories are still a bit excessive,” while at the same time “consumer sentiment has been declining.” Business inventories will need to grow at a faster clip in order to signal a marked improvement in the economy as a whole and help alleviate the uncertainty small business owners face.

Additional Reading

MarketWatch also covered the latest business inventories data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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