Wholesale Inventories in U.S. Unexpectedly Fell in December

Inventories at U.S. wholesalers unexpectedly fell in December for the first time in six months as companies tried to keep pace with cooling sales.

The 0.1 percent decrease in stockpiles followed a revised 0.4 percent rise in November that was smaller than originally reported, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey called for a 0.4 percent gain. Sales were little changed after jumping 2.2 percent in November.

The drop in stockpiles at distributors means inventories will probably subtract even more from fourth-quarter economic growth than currently estimated, partially offsetting a December plunge in the trade deficit that will help boost gross domestic product. At the current pace of sales, wholesalers had enough goods on hand to last 1.19 months, the same as in November.

“We want to see inventories and sales rising at the same time,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, Pennsylvania, and the best forecaster of wholesale inventories over the past two years, according to data compiled by Bloomberg. “There will be a little bit of bounce” in stockpiles early this year, he said.

The median forecast for wholesale inventories was based on a Bloomberg survey of 26 economists. Estimates ranged from increases of 0.3 percent to 0.7 percent. The prior month’s figure was revised from a previously reported 0.6 percent gain.

Another report today showed the U.S. trade deficit narrowed more than forecast in December, led by record exports of petroleum.

Trade Deficit

The gap shrank 20.7 percent to $38.5 billion, lower than any estimate in a Bloomberg survey of 73 economists and the least since January 2010, according to Commerce Department figures. The jump in fuel sales to overseas buyers, combined with purchases of the fewest barrels of imported crude in almost 16 years, led to the smallest petroleum deficit since August 2009.

Stocks rose after the reports and as corporate earnings topped estimates. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,516.84 at 10:17 a.m. in New York.

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.2 percent, today’s report showed. Gains for electrical equipment and hardware were almost completely offset by a 3.8 percent plunge for automobiles, the biggest since March 2009, and a 2.5 percent drop in furniture, the most since July 2009, today’s report showed.

The value of unsold non-durable goods fell 0.6 percent as pharmaceuticals and farm products declined.

Improving retail sales in January may mean wholesalers will need to restock warehouses at the start of 2013.

Sales Improving

Last month, same-store sales for more than 20 companies tracked by Retail Metrics Inc. surged 4.5 percent from January 2012, the biggest year-to-year gain since September 2011. Macy’s Inc., Gap Inc. and Target Corp. led U.S. retailers to the biggest monthly same-store sales gain in more than a year as shoppers snapped up discounted merchandise.

“Our guests continue to shop with discipline in the face of a slow economic recovery and new pressures, including recent payroll tax increases,” Target Chairman, President and Chief Executive Officer Gregg Steinhafel said in a Feb. 7 statement.

Retail stockpiles will be included in the business inventories report due Feb. 13.

Job gains are helping sustain consumer spending. Employers added 157,000 workers in January after a revised 196,000 gain in December and a 247,000 jump in November, the Labor Department reported last week.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Feb. 7 (Bloomberg) -- Mark Zandi, chief economist at Moody’s Analytics Inc., talks about the drop in the productivity of U.S. workers during the fourth quarter and the outlook for the nation’s economy. The measure of employee output per hour decreased at a 2 percent annual rate, the worst performance in almost two years, after a 3.2 percent gain in the prior three months, a Labor Department report showed today in Washington. Zandi speaks with Adam Johnson and Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)