Wholesale Inventories On The Rise

One of the positives for first-quarter GDP is a major inventory build for wholesalers who are trying to keep up with sales. Wholesale inventories rose 1.0 percent in February with January revised higher to 0.9 percent. Year-on-year, February inventories were up a very sizable 5.5 percent but trailing sales which were very strong at 6.8 percent.

Wholesale data include early builds this year for machinery and electrical goods and also primary metals, all of which are part of the capital goods group and at the heart of business investment with metals of special note going into the tariffs of March. It will be interesting to see whether wholesalers in March attempted to, or were able to, stockpile steel and aluminum in an anticipation of higher prices and the risk of scarcity ahead.

But wholesale aside, neither inventories nor sales are showing the same kind of strength in the retail or factory sectors though shipments for the latter have been accelerating. Watch next week for updates on both sectors in the business inventories report.