U.S. Business Inventories Decline for First Time in Nine Months

WASHINGTON (Reuters) – U.S. business inventories fell for the first time in nine months in December as strong domestic demand depleted stocks at retailers and wholesalers.

Inventories dropped 0.2%, the first decline since March, after gaining 0.1% in November, according to the Commerce Department’s Census Bureau’s report released on Friday.

Economists polled by Reuters had forecast inventories, a key component of gross domestic product (GDP), remaining unchanged.

Inventories increased 2.0% on a year-on-year basis in December. They represent the most volatile component of GDP. Private inventory investment notably hindered GDP in the fourth quarter, limiting economic growth to a 2.3% annualized rate; this followed a 3.1% growth pace in the July-September quarter.

Retail inventories decreased 0.4%, revised from a previous estimate of 0.3%. They had increased 0.1% in November.

Motor vehicle inventories declined 1.1%, slightly better than the previously reported 1.2% drop. They fell 0.8% in November.

Retail inventories excluding autos, factored into GDP calculations, slipped 0.1%, contrary to an earlier forecast of a 0.2% increase. These inventories had risen 0.6% in November.

Wholesale inventories saw a 0.5% decrease in December, while stocks at manufacturers saw a 0.4% rise.

Business sales increased 0.8% in December, following a 0.6% rise in November. At the sales pace in December, it would take 1.35 months for businesses to clear shelves, down from 1.37 months in November.