Sales Increase While Inventories Hold Steady

May business inventories remained steady while sales increased, according to the Commerce Department, continuing the line of mixed economic signals.

Inventories have not risen in four months, which is good news for the trucking industry because high inventory discourages manufacturers from making new goods. When that happens, there are fewer deliveries for trucks to make.

The largest increase in business sales since March 2000, 1.1%, suggests that the inventory-to-sales ratio should continue its downward shift, increasing business for the struggling trucking industry.

The May inventory-to-sales ratio, which measures the amount of time goods remain unsold, was 1.42 months, the lowest since December.

That is especially important for dry van freight because when the ratio moves higher, it means companies will have to work down their current supplies on hand before having more goods shipped.

otal inventories at factories, wholesalers and retailers remained at $1.197 trillion in May.

Retail inventories, which account for about one-fourth of business stockpiles, rose 0.4% in May, and the stock-to-sales ratio which measures retailers’ inventories, remained at 1.57 months’ worth, unchanged from April.

General Motors Corp,. Ford Motor Co. and DaimlerChrysler AG have reduced inventories and cut production, now holding 64 days worth of inventory at the current sales pace compared to 91 days worth last year, Bloomberg reported.

Major companies like Compaq and Newell Rubbermaid have reportedly cut production and prices to remain competitive while struggling to balance inventory and sales levels.

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