Wholesale Inventories Declined 0.5% in December, Matching Economists’ Expectations

U.S. wholesale inventories declined 0.5% in December compared to the previous month and declined 0.1% compared to December 2023, the Commerce Department said in a Friday (Feb. 7) press release.

The month’s decline in wholesale inventories followed a decline of 0.1% in November.

Wholesale inventories totaled $898.5 billion at the end of December. That figure included total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading day differences.

The month-on-month decline in wholesale inventories was equal to the forecasts of economists polled by the Wall Street Journal.

Reuters, too, said the decrease matched the consensus forecast of economists it surveyed.

Generally speaking, a decline in wholesale inventory levels means that goods are moving to merchants’ shelves, PYMNTS reported in January. Conversely, if there is no drawdown on wholesale items, retailers have pulled back a bit because they either are experiencing or are anticipating they will see tempered demand from their customers.

In December, inventories of both durable goods and nondurable goods declined, according to the Commerce Department press release.

From November to December, durable goods inventories declined 0.6%. The categories with the biggest declines were electrical, down 1.6%, and lumber, down 0.9%. Professional equipment, automotive, machinery, furniture, hardware and miscellaneous durable saw smaller declines.

Two durable goods categories — computer equipment and metals — saw their inventories rise 0.6% and 0.5%, respectively, during December.

During the same period, nondurable goods inventories declined 0.2%. The month’s biggest drops were seen in grocery, down 1.7%; apparel, down 1.7%; and drugs, down 1.5%. There were smaller declines in chemical, alcohol and miscellaneous nondurable goods.

Three nondurable goods categories — petroleum, farm products and paper —saw their inventories increase 8.1%, 2.2% and 1.2%, respectively.

The Bureau of Economic Analysis reported Jan. 30 that real GDP grew at an annual rate of 2.3% in the fourth quarter, marking a slowdown from 3% and 3.1% increases in the previous two quarters.

The fourth quarter’s increase was driven by rising consumer and government spending, which grew by 4.2% and 2.5%, respectively. A decline in imports also contributed to the growth. However, these gains were partially offset by a 5.6% drop in private investment.

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