Wholesale Inventories Plunge – GDP Affect?
February 9, 2010 3:07 pm
The overriding glee over the potential bailout of Greece did not do justice on how the Wholesale Inventories number stumbled. How will this affect the GDP for next quarter is going to be the question that analysts and economists will be asking.
Wholesale Inventories Much Weaker than Expected
Wholesale inventories fell 0.8% in December after rising an upwardly revised 1.6% in November.
The consensus expected inventories to increase by 0.5%.
The drop in inventories should have been expected. The latest GDP report suggested wholesale inventories declined 0.7% during the month.
Further, most of November’s inventory increase was due to a sharp rise in farm product inventories. As we mentioned in the economic preview, the gains in farm product inventories were not sustainable. They fell 4.5%.
Sales growth remained strong as wholesale sales increased 0.8%. No single sector drove sales as 8 out of 19 sectors posted monthly sales gains in excess of 3.5%.
As a result of the increase in sales, the inventory/sales ratio declined from 1.14 in November to 1.12 in December.
Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.