US: More inventory building to come after solid sales

Business inventories were unchanged in March following a decent rise in sales. The inventory-to-sales ratio edged lower and, along with a stronger sales outlook, points to further inventory growth ahead.
Inventory-to-Sales Declines in March	Inventory Growth Likely to Pick Up and Add to GDP
A strong month of sales left business inventories flat in March. Total sales rose 0.5 percent, led by a 0.7 percent rise at retailers. Manufacturers and wholesalers saw inventory growth slow, while stockpiles at retailers outright declined. The inventory-to-sales ratio ticked down, continuing to unwind from the 2015-2016 soft patch. The I-S ratio remains somewhat elevated, however, suggesting only modest stock building ahead.	Although today’s data only runs through the first quarter, we expect inventories to add to growth again in the second quarter. The pickup in consumer spending, evident in today’s separately released retail sales report, and continued growth in investment spending should encourage businesses to add inventory. The April ISM report showed manufacturers increasing inventories, while customer inventories continue to look too low.
Source: U.S. Department of Commerce, Institute for Supply Management and Windergate Capital