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.
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