Inventories Up Higher Than Expected For Month
On Friday the Commerce Department reported its latest data on monthly US business inventories, which rose 0.3% in September. Reuters reported that economists surveyed had expected inventories to be unchanged from August levels. As this number is crucial to determining the GDP, the Commerce Department will likely revise its Q3 2015 GDP estimates based on this new data. For September, retail inventories not including autos rose 0.5%, similar to the August increase. Meanwhile, business sales were unchanged following a 0.6% fall in August. The AP reported that Friday’s inventory report “showed that stockpiles held by retailers rose 0.8 percent in September, with wholesale inventories up 0.5 percent. Manufacturing stockpiles fell by 0.4 percent.” Overall, “a major effort to work down an overhang of unsold inventories” created “a big drag on the economy” over the summer, cutting 1.4% from overall GDP growth, which fell “to a modest gain of 1.5%.”
What This Means For Small Businesses
The latest business inventories report highlights the continued sluggishness of the US economy. Though a rise in inventories could be positive for some sectors, it’s bad for others, and the economy is continuing to recover unevenly following the recession. The NFIB’s latest small business economic trends report showed that the “net percent of owners reporting inventory increases was a net negative 2% (seasonally adjusted), down 2 points.” The number of owners seeing current inventories as “too low” remained at “a net negative 4%, as weak sales made current stocks look excessive and future sales are not expected to grow much.” NFIB Chief Economist William Dunkelberg commented, “The net percent of owners planning to add to inventory fell 3 points to a net 0%, not much help for Q4 GDP growth.”
Additional Reading
RTT News also covered the business inventories report.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
