US WHOLESALE inventories fell more than initially thought in January, which could negatively impact economic growth estimates for the first quarter.

The Commerce Department’s Census Bureau said on Wednesday (Mar 6) that wholesale inventories dropped 0.3 per cent instead of dipping 0.1 per cent as estimated last month. Stocks at wholesalers increased 0.4 per cent in December. Economists polled by Reuters had expected that inventories would be unrevised.

Inventories are a key part of gross domestic product. They fell 2.5 per cent on a year-on-year basis in January. Private inventory investment subtracted 0.3 per cent percentage point from GDP growth last quarter after providing a large boost in the third quarter. The economy grew at a 3.2 per cent annualised rate in the fourth quarter.

Growth estimates for first quarter are converging around a 2 per cent pace.

Wholesale motor vehicle inventories rose 0.7 per cent. But there were decreases in stocks of farm products, chemicals, apparel and paper. Excluding autos, wholesale inventories dropped 0.4 per cent in January. This component goes into the calculation of GDP.

Sales at wholesalers declined 1.7 per cent after rising 0.3 per cent in December. At January’s sales pace it would take wholesalers 1.36 months to clear shelves, up from 1.34 months in December. REUTERS

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