Business Survey in Focus: Assessment of Inventories in Distribution

To survey developments in the current business situation, the Ifo Institute asks survey participants from the distribution sector to classify their inventories as “too small”, “satisfactory” (normal for the season) or “too big” every month in the framework of the Ifo Business Survey. This article describes the various assessment patterns in the individual distribution segments and analyses the relation between the development in inventories with the current business situation and other variables from the Ifo Business Survey. Overall, the current results indicate that excessive inventories in the Ifo Business Survey are an indicator of overly weak demand. They oblige firms to take corrective measures.