The Manufacturing and Trade inventories report showed a better than expected number in the month of October. Business Inventories are the change in the total value of goods held in inventory by manufacturers, wholesalers, and retailers. It is considered a signal of future business spending as companies are more likely to spend on materials to build up inventories if their current inventories are depleted. The forecasted number called for a 0.9% increase, the actual headline number came in at 0.7%. This seems negative, but considering the prior months number was -1.3%, this months number provides a sigh of relief.
When compared to the prior year we see sales are up YoY (Year over Year) as well as inventories. If inventories were the only items up and sales were down or flat then there would be concern. This inventory buildup is more than likely due to expected turnover due to sales. We will have to keep a watch on inventories after the holiday season to better assess.
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