2025-12-16 15:05:00
The US business inventories and retail inventories ex-auto for September 2025 (old data) shows:
- Business inventories +0.2% versus 0.1% estimate
- Retail inventories ex-auto 0.0% versus 0.0% last month
Details from the Census Bureau:
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Sales: $1,947.5B in September, unchanged vs August (±0.1%), but up 3.7% YoY, pointing to steady nominal demand despite slower monthly momentum.
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Inventories: $2,670.0B at month-end, up 0.2% MoM and up 1.2% YoY, showing continued but modest inventory accumulation.
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Inventories-to-Sales Ratio: 1.37, down from 1.40 a year ago, suggesting inventories remain relatively lean versus sales, reducing near-term overhang risk.
The chart above shows the inventory to sales ratio which is moving lower but still steady. There is nothing concerning regarding the ratio numbers.
US stocks are mixed with the Dow industrial average down -0.22% and the S&P index -0.11%. The NASDAQ index is up 0.13%.
US yields are lower with the two-year down -2.3 basis points, the 10 year down -2.1 basis points at 4.160%, and the 30 year down -1.4 basis points.
Business inventories play an important and sometimes underappreciated role in GDP because changes in inventories are a direct component of economic growth calculations. In the national accounts, GDP measures not just what is sold, but what is produced, and when production exceeds sales, the difference shows up as an increase in inventories, which adds to GDP for that period. Conversely, when businesses draw down inventories to meet demand, that subtracts from GDP, even if consumer spending remains solid.
For markets and policymakers, inventories often act as a swing factor in quarterly GDP. A period of inventory rebuilding can temporarily boost headline growth, while an inventory liquidation phase can weigh on GDP and mask underlying demand strength. This dynamic is especially important when assessing whether growth momentum is being driven by final demand (consumers and businesses) or by stockpiling and supply-chain adjustments.
From a forward-looking perspective, inventory levels also influence future production decisions. Elevated inventories relative to sales can lead firms to cut output, slow hiring, and reduce investment, while lean inventories often prompt higher production and restocking, supporting growth. As a result, economists and traders closely watch inventory growth and the inventories-to-sales ratio to gauge whether inventories are likely to be a tailwind or a headwind for GDP in upcoming quarters.
