Total business inventories divided by total business sales (Census Bureau, FRED ISRATIO). When this ratio rises, businesses have more inventory relative to sales — they will reduce new orders and production to work down the surplus. INVERSE: a rising ratio is bearish for industrials, manufacturers, and retailers because it signals production cuts and order cancellations are coming. Historical average: ~1.25–1.35x.
Excess inventory forces production cutbacks within 4–8 weeks as companies stop placing new orders until shelves clear. The inventory cycle is one of the most reliable short-cycle predictors of industrial earnings revisions: a rising I/S ratio precedes downward earnings revisions for manufacturers and distributors, while a falling ratio signals restocking demand is about to pick up.
| Factor family | Growth |
| Relative weight | Core |
| Update cadence | Monthly |
| Modeled lead | ~8 weeks (a modeling assumption, not a validated finding) |
| Data source | FRED |
The lead time above is a design assumption, not an out-of-sample-validated relationship for a specific security or index. This is one Growth input among 47; it measures macro context, not a full investment thesis.
XLI · XLY · WMT · TGT · COST · HD · LOW · CAT · DE
| Date | Score | Status |
|---|---|---|
| 2026-09-06 | 77/100 | ▲ Bullish |
| 2026-09-05 | 77/100 | ▲ Bullish |
| 2026-09-04 | 77/100 | ▲ Bullish |
| 2026-09-03 | 77/100 | ▲ Bullish |
| 2026-09-02 | 77/100 | ▲ Bullish |
| 2026-09-01 | 77/100 | ▲ Bullish |
| 2026-08-31 | 77/100 | ▲ Bullish |
Unstructured Alpha weighs Total Business Inventory/Sales Ratio alongside 46 other macro signals to build a Confluence Score for each stock. See how this signal is currently shaping the macro backdrop for the tickers you follow.
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Scores are derived from macro signals (FRED, EIA, SEC filings, FINRA short interest)
and updated as new data arrives. This is not financial advice. Past signal accuracy
does not guarantee future results.
unstructuredalpha.com · Not financial advice