Bad Sign For Retail? US Inventories Jumped In December

Inventories at companies in the U.S jumped in the last month of 2018 as sales plummeted the most in three years.

According to a report in Reuters, citing the Commerce Department, inventories, which are a key component of the gross domestic product, came in as expected by economists for December.

The report for December was delayed due to the government shutdown that lasted five weeks and ended in late January. The January report is also delayed as a result and will be released April 1 instead of this week, as had been scheduled.

According to the report, the Commerce Department reported retail inventories increased 0.9 percent in December. In November retail inventories fell 0.4 percent. Motor vehicle inventories rose 0.6 percent, which is slightly under 0.7 percent rise the Commerce Department reported in February. There was a similar gain in November, noted the report. Retail inventories, excluding autos, increased 1 percent in December while wholesale inventories increased 1.1 percent.

The news outlet noted the uptick in inventories came as business sales in December fell 1 percent. That is the biggest percentage decline since December of 2015. In November business sales declined 0.6 percent. Retail sales fell 1.8 percent during the last month of 2018 while sales at wholesalers dipped 1 percent and sales at manufacturers declined 0.2 percent. The report noted that at the December sales rate, it will take 1.38 months for businesses to clear the inventory, which is the most since August of 2017. It’s also higher than the 1.36 months in November.

While retail sales fell in December, a rise in discretionary spending and building materials purchasing, resulted in retail sales increasing by 0.2 percent in January. During the month of January, mail-order and online retail sales notched their largest gain as of December 2017 at 2.6 percent. Auto dealership receipts, however, fell by 2.4 percent in the month to mark the biggest decrease since January 2014. In addition, building material store sales rose by 3.3 percent.


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