Jan inventories at the wholesale level unexpectedly fell by .2% vs a forecasted gain of .2% and Dec was revised lower by .2 of % pt to a decline of 1%. Durable good inventories fell across the board, in auto’s, computers and machinery partially offset by a rise in nondurables, led by groceries. Auto wholesale inventories have now fallen for a 3rd month. Machinery inventories fell for a 12 straight month. Because sales rose 1.3%, the inventory to sales ratio fell to an all time record low of 1.10 from 1.12. Bottom line, inventory restocking (which statistically lifts GDP) has still not handed the baton to stocking likely due to the still uncertain outlook with final demand. With this said, inventories are very lean and even the slightest pick up in end demand should lead to the eventual restocking.
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