US Wholesale Inventories Rose 0.3 % in January

U.S. wholesale inventories unexpectedly rose in January as sales tumbled, suggesting that efforts by businesses to reduce an inventory overhang could persist well into 2016 and restrain economic growth.

The Commerce Department said on Wednesday wholesale inventories increased 0.3 percent in January. December inventories were revised up to show them unchanged instead of the previously reported 0.1 percent dip.

Economists polled by Reuters had forecast inventories falling 0.2 percent in January.

Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into the calculation of GDP – wholesale stocks excluding autos – edged up 0.1 percent in January.

Government data last week showed businesses had made less progress than initially thought reducing the inventory bloat in the fourth quarter. Inventories subtracted just over one-tenth of a percentage point from fourth-quarter GDP growth.

Businesses accumulated record inventory in the first half of 2015, which outpaced demand. Though the pace of accumulation slowed, inventories remained high in the second half of the year, posing a downside risk to 2016 GDP growth.

A report last week showed inventories at factories fell in January for a seventh straight month.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza