Business Inventories Increase As Expected

Business inventories came in as expected in December, up 0.4 percent with November unrevised and also at 0.4 percent and with October unrevised at no change.

December's build was centered among manufacturers where inventories rose 0.5 percent and also wholesalers at 0.4 percent. Retailers held down the total, up 0.2 percent for the fourth straight soft reading. Retail inventories are low but given the softness and downward revisions to this morning's retail sales data, the need to build these inventories doesn't appear to be urgent.

The build in inventories slowed in the fourth quarter and the question now, given the flatness of the retail sector, is how much businesses will need to increase their stocks in the first quarter, an answer that will have direct consequences on the quarter's production and employment.

Recent History Of This Indicator:
Forecasters are calling for a moderate 0.3 percent build for December business inventories, data that will be an input into the second estimate for fourth-quarter GDP.