- Prior was +0.3% (revised to +0.2%)
- Retail inventories ex-autos +0.2% vs +0.2% expected
- Total inventories at $2,678.3 billion
- Inventory to sales ratio at 1.37 vs 1.40 prior
Previously, wholesale inventories rose 0.2% in October. The thinking around tariffs and the shifts in the trade balance is that it should ultimately be a drag on inventories, which will reverse the positive impact from an improving trade balance. If so, we will see things like the Atlanta Fed GDP tracker shift lower.
Today's release and a weak retail sales number earlier will almost certainly lead to a dip in the GDPNow reading for Q4, which is currently at +4.2%. It had been above 5% for most of January.
The Manufacturing and Trade Inventories and Sales report, published monthly by the U.S. Census Bureau, tracks the value of inventories held by manufacturers, retailers, and merchant wholesalers, along with their sales levels. Released approximately six weeks after the end of each reference month, the report provides data adjusted for seasonal and trading-day variations but not for price changes. The report is closely watched as a key indicator of business confidence and economic activity, as rising inventories can signal either strong anticipated demand or weakening sales, while falling inventories may indicate either strong sales or reduced production. The inventories-to-sales ratio, which measures how many months of inventory businesses are holding relative to current sales, serves as a critical gauge of supply-demand balance across the economy.
In August 2025, business inventories were unchanged month-over-month, with manufacturers' and wholesalers' inventories flat while retail inventories fell 0.1 percent. September saw inventories rise 0.2 percent, led by a 0.5 percent increase in wholesale inventories while manufacturers' stocks declined 0.1 percent. October brought a 0.3 percent increase, the fastest growth since January 2025, driven by a 0.6 percent surge in retail inventories. Manufacturers' inventories remained flat while wholesale stocks rose 0.2 percent. The total business inventories-to-sales ratio stood at 1.38 in October, up from pre-pandemic levels, indicating businesses were holding more inventory relative to their sales.
