Ch#2 Business Inventories and Sales Flashcards
From whereth thou collecth?
The Manufacturing
Merchant Wholesalers
Retail Trade Reports
Calculations are based on book value of merchandise held at the end of the month
Business Inventories and Sales
Market Significance+ Low
Typical Release Time+ 10:00 AM EST Tenth Business Day
Released By+ Commerce Department Census Bureau
Period Covered+ Two Months Prior
How is the data broken down?
Inventories, Sales, and Inventory-to-sales (I/S) ratio at each of the three levels. Also for durable and nondurable sectors
What inventory is most volatile and can cause major swings?
Retail Inventories
What happens when a business is growing
Inventories are rebuilt.
Drop in inventories during a recession
Especially early in the cycle stage, normally alludes (calls attention) to business wanting to reduce stocks, and in so doing production and output needs to be cut
Drop in inventories during a recovery
Can be construed (interpreted) as unwanted, and therefore lead to production and output gains in subsequent months
Inventory data is a key swing for which economy indicator
GDP accounts, Department of Commerce’s monthly inventory data, and lastly, the Bureau of Economic Analysis (BEA) uses this tool to estimate real end of quarter inventory levels.
Why does the GDP Estimate think its so critical?
The initial GDP estimate for a quarter includes an estimate for inventories in the final month of the quarter BEA’s estimate can be quite sizeable and result in a fairly pivotal change in the GDP Estimate.
“there is many a slip twixt cup and lip”
What period do inventories grow faster
During recessions, on average, than they do in recoveries. Mostly sharper swings. Because during recessions, demands sink and stocks pile
What do you need for the recovery phase of a business cycle
Inventory building requires confidence. That’s why stock rebuilding is slower.
