Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=229641
Story Retrieval Date: 7/31/2014 8:42:49 PM CST
Department of Commerce
Due to the frigid winter this year, U.S. wholesale sales and inventories in February showed no sign of economic growth.
U.S. wholesale sales and inventories in February showed the barest signs of economic growth. Economists blamed the severe winter and expected to see improvement in the March report.
According to the U.S. Department of Commerce, after seasonal adjustment February wholesale sales rose 0.7 percent to $436.1 billion, following a 1.9 percent drop in January.
Wholesale merchant inventories rose 0.5 percent to $518.3 billion, from the revised January number.
Sales of nondurable goods were up 1.2 percent, leaving inventories barely changed. The February sales “bounce only half-reversed the 2.6 percent January drop, and was smaller than expected,” said Michael Englund, principal director and chief economist of Action Economics LLC.
Inventories of petroleum and related products went down 2.6 percent in February, while sales were up 4.0 percent. “People definitely needed more energy this winter,” said Englund.
Sales of durable goods--machinery, equipment and supplies--rose 0.1 percent, and inventories inched up 1.4 percent.
“Unusually harsh weather may have depressed both retail and wholesale activity,” Englund said.
Gennadiy Goldberg, U.S. strategist at TD Securities LLC, noted that all products need transportation to reach consumers, and thus transportation problems caused by weather probably constituted a collateral cause for the slow economic growth.
The inventory-to-sales ratio for merchant wholesalers was 1.19, steady compared with the prior month, reflecting adjustments of inventories in response to demand.
"You will see better sales in the coming months," said Goldberg, so the inventory-to-sales ratio
should "start to go down."
In the midst of so little change in February, how did the weather help sales of beer, wine and distilled alcoholic beverages to increase by 1.9 percent?
“People probably needed more alcohol to warm up,” Goldberg said.
“I don't track the sales figures as closely as necessary to comment on alcohol sales," Englund said. "Maybe that was because of health insurance cancellation letters?”
The monthly wholesale trade report for March is scheduled for May 9.