Bloomberg News

U.S. Wholesale Inventories Fell 0.1% in September as Sales Rose

November 09, 2011

Nov. 9 (Bloomberg) -- Inventories at U.S. wholesalers unexpectedly declined in September for the first time since 2009 as a gain in sales helped distributors keep stockpiles in line with demand.

The 0.1 percent decrease in inventories compared with a 0.5 percent gain forecast in the Bloomberg News survey and followed a revised 0.1 percent August rise that was less than initially estimated, Commerce Department figures showed today in Washington. Sales climbed 0.5 percent in September.

Wholesalers kept enough goods on hand to last 1.15 months at the current sales pace in September, close to the record low reached earlier this year. Stronger demand along with leaner inventories may encourage manufacturers to boost production.

“Inventories were drawn down fairly rapidly in the third quarter,” Samuel Coffin, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “The fact that the disinvestment was as fast as it was suggest the possibility for faster production in the fourth quarter.”

The median projection for wholesale inventories was based on a survey of 29 economists whose estimates ranged from increases of 0.2 percent to 1 percent. The August reading was revised from a previously reported 0.4 percent increase. The drop in September was the first since December 2009.

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.4 percent in September, led by autos, machinery and lumber, today’s report showed.

The value of unsold non-durable goods inventories decreased 0.9 percent as purchases climbed 1.2 percent. September marked the first gain in sales of non-durable goods since April.

First Quarter

Companies kept a tight rein on stockpiles last quarter, which puts factories on track to boost production when demand grows. Inventories were rebuilt at a $5.4 billion annual pace, down from the second quarter’s $39.1 billion rate, the Commerce Department said Oct. 27. The reduction subtracted 1.1 percentage points from GDP growth.

“We were very cautious to keep our inventories in line,” Blake Jorgensen, chief financial officer of Levi Strauss, said in an Oct. 11 telephone interview from San Francisco. “I’m guessing you will see that with many others with a similar business model. We remain cautious around where the future is going over the next couple of quarters, particularly here in the U.S. with the consumer constrained.”

The world’s largest economy expanded at 2.5 percent pace from June to August. Excluding inventories, the economy grew at a 3.6 percent annual rate, up from a 1.6 percent in the April through June period.

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, grew 0.1 percent in September, the Commerce Department said Nov. 3. Retail stockpiles, which make up the rest, will be included in the Nov. 15 business inventories report.

--Editor: Vince Golle

Company news:

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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