Watch the Census Bureau"s Total Business Sales to Inventories Report to See Demand Pick Up
Federal Reserve Board Chairman Bernanke testified to Congress in early May 2009 that the recession may end in the fall.
I think he is a good judge and his observation offers hope.
We're seeing that hope is reflected the Consumer Confidence Index from the Conference Board and the University of Michigan's Consumer Sentiment Index.
Both are off their bottoms and improving.
The rate of job losses is also decreasing but still too many are losing their jobs.
Consumer attitudes, however, are not leading indicators to an upturn and fewer job losses are a lagging indicator in the business cycle.
Demand is a critical indicator.
A better statistic to watch for demand is the US Total Manufacturing and Trade Inventories and Sales data and ratio of sales to inventories compiled by the U.
S.
Census Bureau.
Total business sales have been trending down since its peak in July of 2008, which means demand is still decreasing as consumers hold back.
In only two months, December 2008 in March 2009, did total sales pick up a bit.
The value of total business inventories peaked in October 2008 and has been trending down slower than the loss of sales.
It took businesses about four months to begin to cut back inventories.
The sales to inventory ratio for all businesses increased dramatically to peak at 1.
59 in February 2009 because sales dropped faster than inventories were cleared.
The March and April 2009 improvements in the ratio to 1.
43 (the smaller ratio the better) finally came primarily from inventory draw downs, not more in sales.
We're lucky and Chairman Bernanke's judgment is correct, at the time sales pick up in late summer or early fall, inventories will have been drawn down enough to stimulate more manufacturing to respond to increasing demand.
Looking at the Census Bureau's chart through April 2009, much of the reduction in the ratio from 2001 to 2008 was caused by better supply chain management and just-in-time delivery.
We were fortunate that there was not a huge inventory overhang when sales dropped off last fall.
The U.
S.
Census Bureau publishes total business sales, inventories, and the sales to inventory ratio monthly in the middle of the month, the data about six weeks time late.
To lead the target and increase inventory, this provides the macro view and your own business's data the micro view of demand.
If we are lucky, businesses will not lead the target too much and start to build inventory before demand picks up.
I think he is a good judge and his observation offers hope.
We're seeing that hope is reflected the Consumer Confidence Index from the Conference Board and the University of Michigan's Consumer Sentiment Index.
Both are off their bottoms and improving.
The rate of job losses is also decreasing but still too many are losing their jobs.
Consumer attitudes, however, are not leading indicators to an upturn and fewer job losses are a lagging indicator in the business cycle.
Demand is a critical indicator.
A better statistic to watch for demand is the US Total Manufacturing and Trade Inventories and Sales data and ratio of sales to inventories compiled by the U.
S.
Census Bureau.
Total business sales have been trending down since its peak in July of 2008, which means demand is still decreasing as consumers hold back.
In only two months, December 2008 in March 2009, did total sales pick up a bit.
The value of total business inventories peaked in October 2008 and has been trending down slower than the loss of sales.
It took businesses about four months to begin to cut back inventories.
The sales to inventory ratio for all businesses increased dramatically to peak at 1.
59 in February 2009 because sales dropped faster than inventories were cleared.
The March and April 2009 improvements in the ratio to 1.
43 (the smaller ratio the better) finally came primarily from inventory draw downs, not more in sales.
We're lucky and Chairman Bernanke's judgment is correct, at the time sales pick up in late summer or early fall, inventories will have been drawn down enough to stimulate more manufacturing to respond to increasing demand.
Looking at the Census Bureau's chart through April 2009, much of the reduction in the ratio from 2001 to 2008 was caused by better supply chain management and just-in-time delivery.
We were fortunate that there was not a huge inventory overhang when sales dropped off last fall.
The U.
S.
Census Bureau publishes total business sales, inventories, and the sales to inventory ratio monthly in the middle of the month, the data about six weeks time late.
To lead the target and increase inventory, this provides the macro view and your own business's data the micro view of demand.
If we are lucky, businesses will not lead the target too much and start to build inventory before demand picks up.
Source...