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U.S. business inventories flat, inventory-to-sales ratio highest since 2009

Published 03/12/2015, 10:28 AM
© Reuters. A worker stacks boxes of TV sets before moving them to the warehouse at Element Electronics

WASHINGTON (Reuters) - U.S. business inventories were unchanged in January and further declines in sales pushed the number of months it would take to clear shelves to the highest since July 2009, which suggests a stock drawdown in the months ahead.

The Commerce Department said on Thursday business inventories were also unchanged in December after previously being reported to have increased 0.1 percent.

Economists polled by Reuters had forecast inventories gaining 0.1 percent in January. Inventories are a key component of gross domestic product.

Retail inventories excluding autos, which go into the calculation of GDP, edged up 0.1 percent after being flat in December.

That could see economists lower their first-quarter GDP growth estimates. Growth forecasts for the January-March quarter currently range between an annualized pace of 1.7 percent and 2.5 percent.

Economic activity early in the year was hurt by a harsh winter and the now-settled labor dispute at the country's West Coast ports, which disrupted the supply chain. The economy grew at a 2.2 percent pace in the fourth quarter. 

In January, business sales fell 2.0 percent, the biggest decline since March 2009, after falling 1.0 percent in December.

At January's sales pace, it would take 1.35 months for businesses to clear shelves, the highest inventory-to-sales ratio since July 2009.

The rise in the ratio from 1.33 in December could be a sign that inventories are now probably approaching levels that might make businesses uncomfortable about adding more stocks.

© Reuters. A worker stacks boxes of TV sets before moving them to the warehouse at Element Electronics

That could mean some cutting back in the months ahead.

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