Business sales and inventories are expanding at strong rates, according to an April Commerce Department report (link opens as PDF) released today. Investors watch this report to understand economic demand (sales), as well as business' expectations for future demand (inventories).

Seasonally adjusted sales jumped 0.7% month-to-month to $1,337 billion for April. Merchant wholesalers recorded a strong 1.3% month-to-month boost, while retailer sales increased 0.6%. In the last year, a 7.8% rise in merchant wholesaler sales provided the primary push for a 5.4% advance in total business sales. Manufacturing has managed a 3.9% sales increase in the last 12 months. 

As sales expanded, inventories also increased a seasonally adjusted 0.6% to $1,728 billion for April. Analysts were pleasantly surprised, having expected a smaller 0.4% rise.  As with sales, merchant wholesalers took the lead on relative increases, expanding inventories 1.1% from March to April. In the last year, overall inventories are up 5%.

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales and inventories increased relatively similar amounts from March to April, the inventories/sales ratio remained at 1.29. In April 2013, the ratio was 1.30.