Wholesalers Cut Inventories, Raised Sales in Feb.
by Christina Lee on April 9th, 2009
The latest wholesale trade report surprised experts, as it indicated that wholesalers are more in sync now with the rest of the economy.
Wholesalers had cut inventories by 1.5 percent from the previous month’s levels in February, more than double of what Wall Street experts predicted. Since lower holiday sales led to more leftover goods than expected, cutting such excess inventory over the past few months became a necessary step toward economic recovery.
“It’s easy to see this reduction as an assurance that the contraction is continuing,” said Frank Ahrens, Washington Post analyst, in his column. “However, the sooner wholesalers adjust their inventories to match diminished demand, the closer they come to resuming profitability.”
Wholesale sales also increased by 0.6 percent to $319.7 billion – the first uptick seen since June 2008, and quite a recovery from January’s 2.4 percent sales decline. Coupled with the drop in wholesale inventories, this further indicates a slight resurgence in production as wholesalers began to seek new goods.