Wholesale Inventories Rise, Sales Fall Back

Inventories in the wholesale sector had not been keeping pace with sales which had been very strong and which helps to explain January's large 0.8 percent build. The gain compares with an advance estimate of 0.7 percent and a 0.7 percent build in December which is now revised 3 tenths higher.

Though sales in the wholesale sector have been strong, they fell back 1.1 percent in January which also helps explain the month's large build. The sales drop reflects a 1.4 percent drop in durables which included a 0.5 percent decline for autos where retail sales have been weak. The overall sales drop raises the sector's stock-to-sales ratio to 1.26 from 1.23 and points to less inventory building ahead.

But year-on-year inventories are still lean, up 4.8 percent for the sector vs a sales gain of 6.7 percent. And for January, today's build together with a preliminary build of 0.8 percent build for retailers and a 0.3 percent build in durables at manufacturers points to a fast start for the inventory component of first-quarter GDP.