US business inventories in May 2025 stayed the same at 0.0%, meeting expectations. The previous month also showed no change with a 0.0% growth. Retail inventories, excluding autos, increased by 0.2% in May, matching April’s results. Sales were $1,913.9 billion, down 0.4% from April 2025 but up 3.1% compared to May 2024.

Inventory To Sales Ratio

The inventories-to-sales ratio was 1.39 in May 2025, down from 1.41 in May 2024. This slight decrease indicates that business stock is tightening a bit compared to sales. According to Michalowski, steady business inventories suggest caution. However, the lower inventory-to-sales ratio is more crucial for traders. With the ratio now at 1.39, demand appears to be slightly exceeding supply, which typically supports economic stability. This lowers the risk of a sudden economic downturn caused by excess inventory. This stability hints that the implied volatility in major market indices, like the S&P 500, might be too high. Historically, the VIX index tends to drop during stable economic times, as seen throughout much of 2023 when it often traded below 15. We think strategies like selling options premium through iron condors or credit spreads on major indices could be beneficial in the upcoming weeks.

Opportunities In Manufacturing Sector

The data suggests potential growth in certain sectors needing to restock inventories. Recent Purchasing Managers’ Index (PMI) data from the Institute for Supply Management indicates that the manufacturing sector is in mild expansion. This need to replenish could speed up growth. We see this as a chance to buy call options or bull call spreads on industrial and materials sector ETFs to take advantage of potential production increases. This stable economic data also supports the idea that the Federal Reserve is not likely to make sudden changes. The CME FedWatch Tool shows a probability of less than 15% for a change in the federal funds rate at the next meeting. This creates a positive environment for strategies that thrive in range-bound markets, reinforcing our belief that derivative positions should focus on stability instead of major directional shifts. Create your live VT Markets account and start trading now.

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