Inventories to Sales Ratio Rising

By way of JimH in the comments section, the ratio of inventories to sales has been rising through 2015.

invent to sales

(link to graph)

Through the 1990’s and into the 2000’s, inventories were dropping with such things as advances in supply chain management and point of sale inventory control. However since the crisis, that trend is reversing. Businesses are keeping more inventory. And especially in 2015, the ratio increased quite a bit.

  • So why is the trend reversing?
  • Is China dumping products?
  • Are oil reserves rising as oil producers pump more and more to maintain cash flow?
  • Are businesses becoming less efficient?
  • Is the economy making businesses less efficient?
  • What effect might this increase have on inflation and employment?
  • To what extent might this new trend be a concern?

Please leave your opinion in the comments section below.