US Wholesale Inventories Unexpectedly Fall 0.8% in Sign of Higher Demand

[Purveyor]

Source: BLOOMBERG



By Courtney Schlisserman

Feb. 9 (Bloomberg) -- Inventories at U.S. wholesalers unexpectedly fell in December following the biggest increase in more than five years, indicating distributors had trouble keeping up with demand.

The 0.8 percent decrease in stockpiles followed a revised 1.6 percent gain in November that was the largest since July 2004, figures from the Commerce Department showed today in Washington. Sales climbed 0.8 percent.

A record inventory drawdown last year has opened the door for manufacturers to pick up production and other companies to increase orders to meet demand. Efforts to prevent stockpiles from falling further in the fourth-quarter provided its biggest boost to economic growth in 20 years and may keep supporting the economy in coming quarters.

“The sales numbers are strong,” said David Sloan, a senior economist at 4Cast Inc., a New York forecasting firm. “If sales continue to rise, inventories are poised to be rebuilt.”

Economists forecast inventories would rise 0.5 percent after a previously estimated 1.5 percent increase in November, according to the median of 31 projections in a Bloomberg News survey. Estimates ranged from a drop of 0.8 percent to a 1 percent gain.

Job openings rose in December to 2.5 million from 2.43 million a month earlier, the first gain in three months, a report from the Labor Department also showed today. Manufacturers and retailers were among industries with the biggest increase in employment opportunities.

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=ay21tMFYUyiI

[dmallind]

1. OK let's see who can spin this to mean doom first and best......NT

[M155Y_A1CH]

3. How 'bout this one

Wow, this is great news for China!

[dmallind]

6. The 2.5 million jobs are in China?

[nyy1998]

8. Winner would gets a prize, but we ran out of them.

[nc4bo]

2. I guess it depends on what those products are. Considering it's Nov.-Dec.

Any of that related to the holiday season? More people buying, perhaps not buying frilly gifts but practical ones? Or the extra employees typically needed that time of year?

Income tax season coming - many people will be getting nice sized refund checks that could be used to buy "stuff" or provide a down payment on that car or whatever else they've been putting off purchasing...

I know we should all be looking for some optimism where ever we can find it, no one as much as me and my hubby who depend on the hotel/travel industry for the majority of our bread and butter but I'm having a hard time being optimistic from this one little report.

Now if it's sustained, way different story.

[mbperrin]

4. NONE of the reduction in value was due to markdowns on seasonal

merchandise after Christmas and New Year's?

Really?

Well, okie dokie then.

[whattheidonot]

5. weak consumer income

These products were produced with less labor costs and still weak income figures. Not a robust combination. The bulk of these productions were most likely in essentials, essentials including electronic purchases.

[TexasObserver]

7. The "back to back" aspect of the two months is instructive.

Inventories had the biggest increase in more than five years, followed by the biggest decrease (in December) in more than five years.

Here's what these data suggest: Inventories were built up in anticipation of the Christmas season, and those sales were pushed earlier than usual for the Christmas season. Then when December came, retailers sold more than they might have anticipated, causing inventories to drop more than expected.

The month by month approach is subject to swings that may not be real. Considering the entire quarter as a unit makes more sense. Comparing the numbers from that quarter to previous fourth quarters would likely show a more uniform line for inventories.

It's like weighing Thanksgiving night and using that as your weight for November. Then when you weigh yourself in mid December you might be able to say "I've actually lost weight since Thanksgiving!" While true, it doesn't tell the complete story. What did you weigh the week before Thanksgiving? What will you weigh the day after New Year's? If we want an actual gauge, we have to include more time, to get a realistic view of what's happening. If you gained 10 pounds between October 1 and December 31, that's the reality, no matter what you did for some 3 week period.

In summary, while this is good news, it must be viewed against the backdrop of the preceding month's five year peak.

[Kahuna]

9. No! Not that!!! The gloom and doomers won't like this!

:applause: