Wholesale Inventories in U.S. Rose More Slowly as Sales Gained
Inventories at U.S. wholesalers rose in August at a slower pace as sales advanced from the previous month.
The 0.5 percent increase in stockpiles followed a revised 0.6 percent rise in July, Commerce Department data showed today in Washington. The median forecast in a Bloomberg survey called for a 0.4 percent August gain. Sales increased 0.9 percent from a 0.2 percent drop the previous month.
Companies are tempering stockpiles as the impasse over U.S. fiscal policy clouds the outlook for demand through the end of the year, showing inventories may contribute less to economic growth. Wholesalers had goods on hand to last 1.20 months at the current sales pace.
“Business is usually pretty good about bringing inventories back in line pretty quickly” after an “involuntary buildup” in the last few months, Ryan Wang, an economist at HSBC Securities USA Inc. in New York, said before the report. “Slower inventory accumulation is another reason why growth will probably stay pretty modest in the second half of the year.”
The median forecast for wholesale inventories was based on a Bloomberg survey of 28 economists. Estimates ranged from no change to an increase of 0.8 percent.
Texas Instruments Inc. (TXN), the largest maker of analog chips, is among businesses easing stockpiles absent a bolstering of demand. The Dallas-based company is “playing it pretty carefully” against a “softness across the board” in the economy, Chief Executive Officer Rich Templeton said at a Sept. 12 conference.
“I continue to believe that the supply chain looks very, very lean in terms of where inventories are,” Templeton said. “Take a look at some of the U.S. distribution companies, and they are at historical low days of inventory, and they’re being very careful because they read all the same headlines that you read.”
Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.1 percent, boosted by machinery, metals and hardware, today’s report showed.
Sales of big-ticket items rose 0.9 percent after a 0.8 percent decrease in July.
The value of unsold non-durable goods advanced 1.2 percent, lifted by a 9.4 percent gain in petroleum, as sales increased 0.9 percent.
The inventory-to-sales ratio dipped in August from 1.21 months in July.
Employment figures released last week by the Labor Department show consumer spending, which accounts for about 70 percent of the economy, may support economic growth even as fiscal uncertainties and global cooling remain drags on business investment and hiring.
The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated. The jobless rate unexpectedly dropped to 7.8 percent from 8.1 percent and hourly earnings climbed more than forecast.
The Federal Reserve signaled it’s moving toward linking its outlook for near-zero interest rates to specific economic conditions such as a decline in the unemployment rate, rather than tying low rates to the calendar, according to minutes of the Federal Open Market Committee’s Sept. 12-13 meeting released last week.
Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, rose 0.6 percent in August for a second month, Commerce Department data showed. Retail stockpiles, which make up the rest, will be included in the business inventories report due on Oct. 15.
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