December saw an unexpected decrease in wholesale inventories bringing with it the possibility that the improving U.S. economy has long-lasting legs. According to a Bloomberg article, “at the current sales pace, it would take 1.12 months for wholesalers to deplete the amount of goods on hand.” Stockpiles hit a record-low of 1.11 reading in June, as companies reduced stock to compensate for the lack of consumer demand.
What does the 0.8 percent decrease in stockpiles for December represent? It shows that manufacturers couldn’t keep pace with the level of demand which includes inventory rebuilding along with increased sales.
The rebuilding of depleted inventories contributed 3.4 percent points to gross domestic product in the fourth quarter, the most in 20 years.
With a large chunk of inventory depletion coming from inventories of durable goods (items meant to last three or more years), this gives lasting support for the continued expansion of the U.S. economy. According to a report from the Labor Department, job openings in December increased to 2.5 million from 2.43 million a month earlier with most opportunities in manufacturing and retail, further highlights the continued growth in the U.S. economy. [Bloomberg]