Economy

Wholesalers Running on Lower Inventories

Jon C. Ogg

Published: February 9, 2016 2:05 pm

Last Updated: January 13, 2020 1:24 pm

Among this week’s top economic reports is the monthly wholesale trade data for December 2015. This can impact gross domestic product revisions if they are off by much. Tuesday’s report from the Commerce Department showed that wholesale inventories fell by 0.1%. Bloomberg was calling for a drop of 0.1% as well.

The report from November was revised to -0.4% from a preliminary report of -0.3%.

Sales of merchant wholesalers were down 0.3% at $440 billion versus the month of November. The range of error was set at +/- 0.9%. Versus the same period of 2014, sales were down a sharp 4.5%, with a margin of error of +/- 1.4%. December’s durable goods were logged in as a gain of 0.3% from November, but down 3.0% from December of 2014.

Total inventories were down 0.1% from November but were up 1.9% from the prior year to $582.0 billion.

A last consideration here is the inventories-to-sales ratio. This was 1.32, versus 1.24 from December 2014.

If sales are slow or are expected to remain slow, businesses remain less likely and less willing to go spend more to bring in more inventories. The fallout there is pretty obvious: slower manufacturing, lower shipping business and fewer packaging needed. Oh, and of course that can come with fewer people needed to keep the lights on.

Sporting goods, hobby, book and music stores were up 7.6% from December 2014. and non-store retailers were up 7.1% from last year. A random sampling method is used to select approximately 4,700 retail and food services firms, and the data are then weighted and benchmarked to represent the complete universe of over 3 million retail and food services firms.