Wholesale inventories unexpectedly falls and I/S ratio now at record low
Jan inventories at the wholesale level unexpectedly fell by .2% vs a forecasted gain of .2% and Dec was revised lower by .2 of % pt to a decline of 1%. Durable good inventories fell across the board, in auto’s, computers and machinery partially offset by a rise in nondurables, led by groceries. Auto wholesale inventories have now fallen for a 3rd month. Machinery inventories fell for a 12 straight month. Because sales rose 1.3%, the inventory to sales ratio fell to an all time record low of 1.10 from 1.12. Bottom line, inventory restocking (which statistically lifts GDP) has still not handed the baton to stocking likely due to the still uncertain outlook with final demand. With this said, inventories are very lean and even the slightest pick up in end demand should lead to the eventual restocking.
Tweet
Facebook
Reddit
Digg this!
March 10th, 2010 at 8:36 pm
Business was really slow at the plant where I work. So back in April of 09 we were all put on a four day work week. In October, we were back to working a five day week building inventory. At the beginning of January 2010, we were put on a three day workweek. Business hasn’t picked up much as most of our customers still complain that banks are not lending them money. The past few weeks have been a little better. At least we will remain working if only three days a week.
We had a meeting at work today. The boss said it looks like the business has bottomed and some signs that its turning around. But sales are still not strong enough to warrant putting us back on a five day week. Investories are where the company wants them. I’m sure its the same in many other businesses.
I also feel that the Cap and Trade, Obamacare, banks still not lending to small business, all are having an impact on managements decision making. Even the talking heads for the Obama administration are now saying they don’t see jobs coming back till next year.