June 2011 Business Sales Still Show Solid Growth

The headlines for June 2011 USA business sales say sales are up 0.4% month-over-month, and 12.4% year-over-year.  Econintersect’s analysis shows sales down 1% month-over-month, and up an inflation adjusted 8.5% year-over-year.

The way data is released, differences between the business releases pumped out by the US Census are not easy to understand with a quick reading. The entire story doesn’t really come together until the Business Sales Report (this report) comes out.  

Earlier today (analysis), Econintersect analyzed advance retail sales for June 2011. That is early data for the month after the data for this post. This is final data from the Census Bureau for June 2011 for:

The headlines:

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for May, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,187.8 billion, up 0.4 percent (±0.2%) from May 2011 and up 12.4 percent (±0.4%) from June 2010.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,518.5 billion, up 0.3 percent (±0.2%) from May 2011 and up 11.1 percent (±0.4%) from June 2010.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of June was 1.28. The June 2010 ratio was 1.29.

Econintersect evaluates the data using similar logic to GDP improvement calculations.  Data is compared year-over-year, then the year-over-year results are compared month-over-month.  The methodology used by US Census compares data over many years.

Even viewing this data with inflation adjustment to consumer prices (which may not necessarily be valid for the manufacturing or wholesale portions of the data), the data rebound seen last month as been partially negated.

Using inflation adjustments, analysts can more clearly count the quantity of business transactions.  Inflation adjusted data shows retail sales have been growing 8% to 10% for most of 2011 – a solid growth.  There are no signs of contraction.

Most analysts pay particular attention to inventories in this report. Inventories, expressed as a ratio to sales, contracted slightly and remain well within the historical levels for past Junes. A unusual rise in this ratio would suggest the economy was contracting.

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