Reports total U.S. business sales and inventories or Total current-dollar sales and inventories for the manufacturing, wholesale, and retail sectors of the economy.
Traders look at how retail inventory numbers will influence interest rates. If inventories are rising at a faster pace than sales, this usually indicates that the economy is slowing down. A slowing economy means lower interest rates, which is dollar bearish.
It is considered dollar bullish if both sales and inventories are rising at the retail, wholesale, and manufacturing level.
The Business Inventories Report includes comprehensive sales and inventory statistics from all three stages of the manufacturing processes, that is to say, manufacturing, wholesale, and retail. By the time the report is released, however, all three of its sales components and two of the inventory components contained therein would have already been reported.
As the retail inventory is effectively the only new piece of information the Business Inventories Report contains, the report itself causes few ripples in the market. Occasionally, however, retail inventories do swing far enough to affect changes to the aggregate inventory profile which may affect the GDP outlook. At the times when this does happen, the report has been known to elicit a small market reaction.
In essence, while the market tends to be far more interested in forward-looking statistics these aggregate sales figures tend to be dated and say little about personal consumption, they are however still a good coincident indicator.
The information contained in Business Inventories is really far more useful to market economists than it is to other market participants.
It is released at 8:30 am EST six weeks after the month ends. For example, data for June is reported in mid-August.
Vincent Nyagaka is a Professional Trader, Analyst &. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Checkout Vincent’s Professional Trading Course here.