Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Businessweek Archives

Lower Inventories Might Not Be Much Cause For Cheer


Economic Trends

LOWER INVENTORIES MIGHT NOT BE MUCH CAUSE FOR CHEER

Some economists predict that the recent sharp drop in manufacturing inventories will spark a strong upturn in output. Charles Lieberman of Chemical Securities Inc., however, is skeptical. Lieberman points out that the decline in factory inventories in recent months--and years--has occurred entirely in stocks of raw materials and work in process. By contrast, inventories of unsold finished goods have increased to their highest level in the current business cycle and are plentiful at factory, wholesale, and retail levels.

The distinction is critical, says Lieberman. Although stocks of finished products are quickly affected by shifts in final demand, inventories of raw materials and other unfinished goods mainly reflect the current rate of production. Thus, he argues that the recent decline in unfinished-goods inventories suggests that the current pace of production is slowing, while the high level of finished-goods stocks "implies that there is little apparent need to boost output to replenish stocks."GENE KORETZ


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus