On Tuesday morning, we’re going to get an update on how much inventory businesses built up in July, courtesy of the Census Bureau. Meanwhile, a separate survey of businesses — called the Logistics Managers’ Index — found that inventory levels picked up in August after contracting throughout the summer, ahead of this year’s holiday shopping season.
The inventory pickup in August mostly happened at the wholesale level. Zac Rogers at Colorado State University puts together the Logistics Managers’ Index and said that’s normally what you’d expect ahead of the holidays, “with the idea that in September and October, that inventory will be on a retail shelf,” he said.
But inventory management over the last few years has been anything but normal, he added.
In 2021, retailers ordered inventory a lot earlier in the year since supply chains were congested. Then, over the next couple years, retailers ordered less inventory altogether since they had built up too much.
But now, companies are acting more like they did prior to the pandemic.
“We’ve now been able to go back to just-in-time inventory management, where things are showing up to the store right before we need them,” Rogers said.
That strategy can help retailers ensure that they don’t order too much.
Plus, companies have a few reasons to be cautious about consumers, noted Jason Miller, a professor of supply chain management at Michigan State University.
“You’ve got higher credit card delinquency rates, and a lot of just uncertainty with the presidential election cycle,” he said.
As a result, companies are likely to keep their inventories pretty tight over the next year.
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