US Business Inventories fell for the 8th consecutive month in April at 1.1%, just slightly above expectations for a decline of one percent. Also, the previous month's one percent fall was revised to a contraction of 1.3%. The figure has fallen since September as the financial crisis escalated and demand slowed significantly. Looking deeper into the release, all three groups that make up the measure declined by more than one percent each with wholesale inventory contracting the most at 1.4%. Reduction in inventory has been on pace with weaker sales that have kept the ratio of inventory to sales high at 1.43. Several sectors continue to suffer the most as the ratio remains above 2.0 in autos & parts, building materials, clothing, and department stores. On the upside, all sectors posted either no change or an improvement in their individual ratios with the except of furniture. Going forward, it will be important to see a rise in the data and a fall in the inventory to sales ratio as that would be viewed positively as optimism on future demand.
