Business Inventories up 0.5 Percent in April

Business inventories were slightly larger than expected in April led by increases at the wholesale and retail level; manufacturing inventories were flat for the month. Sales were up 1.4 percent led by a 2.2 percent sales increase in manufacturing, suggesting that businesses will keep production levels steady

Business Inventories Outpaced by Sales

• Business inventories grew slightly more than expected in April - up 0.5 percent for the month.
• Increases in sales were positive across the board, a good sign that businesses may not need to scale back production later this year. The inventory-to-sales ratio is near an all-time low.

Factories Doing Better Than They Say

• Despite the fact that the ISM manufacturing index has been below 50 for the last four months, which should indicate a contraction in activity, sales at factories increased in April at the fastest rate since 2004.
• Retail inventories are not building as quickly, which could be a positive later this year when tax rebate spending slows.

Wachovia Corporation
http://www.wachovia.com

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