Inventories need to be built up in the wholesale sector in what may be
soft news for GDP, where low inventory numbers are a negative, but very
good news for production and employment. Wholesale inventories inched
only 0.1 percent higher in April against, however, a 0.8 percent surge
in sales. This mismatch pulls down the stocks-to-sales ratio to a very
lean 1.28. Year-on-year rates confirm the imbalance with inventories up
5.8 percent against a 7.8 percent rise in sales.
The nation's
businesses, wholesalers included, have been very conservative in their
inventory manage, reflected not only in hard data like today's report
but also anecdotal reports like ISM manufacturing where more and more of
the respondents say inventories of finished goods are too low.
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