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U.S. wholesale inventories unexpectedly rise on weak sales
March 9, 2016 / 3:00 PM / 2 years ago

U.S. wholesale inventories unexpectedly rise on weak sales

WASHINGTON, March 9 (Reuters) - U.S. wholesale inventories unexpectedly rose in January as sales tumbled, suggesting that efforts by businesses to reduce an inventory overhang could persist well into 2016 and restrain economic growth.

The Commerce Department said on Wednesday wholesale inventories increased 0.3 percent in January. December inventories were revised up to show them unchanged instead of the previously reported 0.1 percent dip.

Economists polled by Reuters had forecast inventories falling 0.2 percent in January.

Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into the calculation of GDP - wholesale stocks excluding autos - edged up 0.1 percent in January.

Government data last week showed businesses had made less progress than initially thought reducing the inventory bloat in the fourth quarter. Inventories subtracted just over one-tenth of a percentage point from fourth-quarter GDP growth.

Businesses accumulated record inventory in the first half of 2015, which outpaced demand. Though the pace of accumulation slowed, inventories remained high in the second half of the year, posing a downside risk to 2016 GDP growth.

A report last week showed inventories at factories fell in January for a seventh straight month.

In January, sales at wholesalers declined 1.3 percent after sliding 0.6 percent in December. At January’s sales pace it would take 1.35 months to clear shelves, the highest ratio since April 2009, compared with 1.33 months in December.

That high ratio suggests the so-called inventory correction at wholesalers could continue for a while and hurt manufacturing and overall economic growth. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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