Business Inventories Edge Lower In November

December retail sales will not be the only input holding down fourth-quarter GDP as November inventories won't be a plus either. Business inventories edged 0.1 percent lower but do follow a strong 0.6 percent build in October.

Yet inventories clearly looked heavy going into year-end as business sales in November fell 0.3 percent, an unwelcome decline that isn't enough, however, to raise the inventory-to-sales ratio which is unchanged at a still lean 1.35.

Retail inventories fell 0.4 percent but may move higher in December given how soft retail sales in the month proved to be (down 1.2 percent in data released earlier this morning). Factory inventories also fell, down 0.1 percent while wholesale inventories rose 0.3 percent.

In a special warning, growth in year-on-year total inventories, which trailed growth in year-on-year sales through last year, is now ahead of sales, at 4.6 to 4.2 percent. The signs of global slowing that had eluded the U.S. may now be appearing, first in consumer spending and secondly in inventories.