Wholesale Sales Drop, Inventories Rise for January


Wholesale sales for January fell 0.8%, to a seasonally adjusted $415.4 billion, according to a Commerce Department report [link opens in PDF] released today. Over the same time period, wholesale inventories rose 1.2%, to $504.4 billion, creating an increasingly precarious relationship between inventories and sales. Analysts had expected a slight 0.4% rise in inventories.

Compared to December's steady sales and reduced inventories, this latest report is not good news for wholesalers. Looking back to January 2012, sales have improved 3%, while inventories have risen 6.5%.

Adjusted durable goods sales increased 0.7% in January, while nondurable goods sales fell 2.1%. Sales improved the most for machinery (+4.2%), while a 7.2% dip in farm product sales lagged other businesses. Lumber inventories jumped 22.1% in January, while "miscellaneous nondurable" recorded a 3.1% decrease.

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales fell and inventories rose from December to January, the inventories/sales ratio also rose from 1.19 to 1.21. This is the largest inventory/sales ratio recorded since the recovery began.

Source: Commerce Department

The article Wholesale Sales Drop, Inventories Rise for January originally appeared on Fool.com.

You can follow Justin Loiseau on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.