Quiver Quantitative - U.S. wholesale inventories declined by 0.4% in March, confirming that inventory investment remained a drag on economic growth in the first quarter, according to data released by the Commerce Department's Census Bureau on Wednesday. The decrease in March followed a 0.2% rebound in February. Economists surveyed by Reuters had expected inventories to remain unrevised. On a year-on-year basis, wholesale inventories dropped 2.3% in March.
Private inventory investment subtracted 0.35 percentage points from GDP growth in the first quarter, marking the second consecutive quarter in which inventories negatively impacted GDP. The U.S. economy grew at a 1.6% annualized rate in the January-March quarter, the slowest pace in nearly two years. Wholesale motor vehicle inventories slipped by 0.1%, while stocks of metals, hardware, paper, medication, and apparel also decreased. However, there were increases in petroleum stocks, as well as in lumber, furniture, machinery, and computer equipment inventories.
Market Overview: -U.S. wholesale inventories fell in March, confirming a negative impact on GDP growth in the first quarter.
Key Points: -The 0.4% decline matches previous estimates, signifying a slowdown in inventory investment. -This marks the second consecutive quarter where inventories subtracted from GDP growth. -The annualized rate of 1.6% for Q1 GDP represents the slowest growth in nearly two years.
Looking Ahead: -Declining sales and a longer inventory turnover period pose challenges for wholesalers. -Continued weakness in inventory investment could hinder economic recovery. -Monitoring inventory levels remains crucial for assessing future GDP growth.
Excluding autos, wholesale inventories fell 0.5% in March, a component that directly influences GDP calculations. Sales at wholesalers declined 1.3% in March following a 2.0% increase in February. At March's sales pace, it would take wholesalers 1.35 months to clear their shelves, up slightly from 1.34 months in February.
The decline in inventories indicates a cautious approach by wholesalers amid concerns over consumer demand and economic uncertainty. The latest data underscores the ongoing challenges facing the U.S. economy as it grapples with slowing growth and inflationary pressures.
This article was originally published on Quiver Quantitative