The Economy

Wholesale Inventories Post Largest Increase in 10 Months

Wholesale inventories rose 0.6% to $587.9 billion in April, 50 basis points higher than projections.
Katie Kuehner-HebertJune 9, 2016

The economy could get a needed boost in the coming months, as U.S. wholesale inventories recorded their largest increase in 10 months in April, the Commerce Department said Thursday.

Wholesale inventories rose 0.6% to $587.9 billion in April, compared with the 0.1% rise that economists polled by Reuters had expected. Inventory gains in March were upwardly revised to 0.2%, from 0.1% that had been previously reported.

The increase in inventories is a good sign for the economy because it adds to GDP growth and suggests wholesalers are expecting strong sales to clear their stocks.

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“Inventories have been a drag on GDP growth since the third quarter of 2015,” CNBC/Reuters wrote. “Businesses accumulated record inventory in the first half of 2015, which outstripped demand. Though the pace of accumulation slowed, inventories remained high in the second half of 2015 and the first quarter of 2016.”

Inventories of lumber and other construction materials in April were up 1.3% from March, while inventories of computer and computer peripheral equipment and software were down 3%. Inventories of nondurable goods were up 1.3% from March and were up 5.5% from last April. Inventories of farm product raw materials were up 7.5% from March and inventories of drugs and druggists’ sundries were up 2.2%.

Ultimately, of course, it’s the sale of inventories that matters. April’s sales numbers were about even with expectations.

April sales of merchant wholesalers were $434.2 billion, up 1% from the revised March level, but down 2.6% from the April 2015 level. April sales of durable goods were up 0.4% from March, but were down 1.4% from a year ago.

Sales of motor vehicle and motor vehicle parts and supplies were up 1.6% from March, while sales of electrical and electronic goods were down 2.7%. Sales of nondurable goods were up 1.5% from March, but were down 3.8% from last April. Sales of petroleum and petroleum products increased 9% from March.