Business Inventories Rose in January Amid Expected Slowdown in Sales

Business inventories increased in January, ending the month 0.3% higher than a month earlier and 2.3% higher than a year earlier.

The 0.3% gain seen in January followed a 0.2% month-over-month decline recorded in December, the Census Bureau said in a Monday (March 17) press release.

These figures include manufacturers’ and trade inventories, according to the release.

Reuters attributed January’s growth in inventories to declining sales, reporting that inventories were depleted in the fourth quarter because of strong consumer spending that was driven in part by a desire to buy goods before tariffs were imposed.

January’s rise in inventories was expected by economists, according to the report.

The month’s changes varied by type of business, with merchant wholesalers’ inventories rising 0.8% during January, manufacturers’ rising 0.1% and retailers’ remaining flat, according to the Census Bureau press release.

While retailers’ inventories were unchanged, the total excluding motor vehicles and parts rose 0.5%.

The inventories of motor vehicle and parts dealers declined 1% in January.

Four other categories of retailers included in the Census Bureau figures saw their inventories grow during the month. Inventories grew 1.4% at clothing and clothing accessories stores; 1.1% at furniture, home furnishings, electronics and appliances stores; 0.6% at building materials, garden equipment and supplies stores; and 0.5% at general merchandise stores.

The inventories of food and beverage stores were flat in January.

Some of the largest commerce firms are cutting guidance for the current quarter as consumers pull back at the register, PYMNTS reported Friday (March 14).

There may be a perfect storm brewing for merchants as consumers sour on their job prospects, their expectations for inflation worsen and retailers’ own costs rise.

Retailers’ ability to pass those costs along to consumers in the form of higher prices will be truncated.

On Sunday (March 16), it was reported that retail foot traffic at U.S. stores dropped by 4.3% in early March, adding to earlier decreases that have been seen since the beginning of the year.

It was also reported that sales of discretionary general merchandise dipped by 3% for the week ended March 8, following a year-over-year decline in February.