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What Growth in US Wholesale Report Says About the Economy and Retail

Rising inventories suggest the economy is growing, but stock levels could leave some goods unsold even though more discounting to move merchandise could help lower inflationary pressures on consumers.

The U.S. Commerce Department on Tuesday said wholesale inventories rose 1.0 percent in November 2022 to $933.08 billion from October, which increased 0.6 percent on a revised basis. The data is adjusted for seasonal variations and trading day differences, but not for price changes. Total inventories rose 20.9 percent from November 2021.

November’s ratio of inventories to sales was 1.35 months, based on seasonally adjusted data versus 1.21 a year-ago. That means it would now take a bit longer for wholesalers to sell their stock versus 12 months ago. The 1.35 ratio, representing a slight uptick from 1.32 months in October, is the highest since June 2022.

Fashion inventories in the nondurable categories in November rose 2.3 percent to $43.16 billion from October. However, the inventories to sales ratio was 3.03 months, far higher than the 1.88 ratio in November 2021. In durables, furniture inventories were up 1.4 percent to $22.19 billion. Its inventories to sales ratio was 1.98, up slightly from 1.78 in the year-ago period.

The wholesale report measures the change in the total value of goods held in inventory by wholesalers. Wholesale inventory includes raw materials, work-in-progress items, and finished goods available for sale.

Businesses in the back half of 2022 appeared to carefully manage their inventory. Looking at the start of the fourth quarter, wholesale inventories in October rose 0.5 percent, down from the 0.8 percent increase in September, while stocks at wholesalers were up 0.6 percent.

November’s inventory increase seems in line with production needs for new first-quarter merchandise orders. And that increase could contribute to fourth-quarter U.S. GDP growth. But that growth, along with a relatively tight labor market, could make it harder for the Fed to pull back on interest rate hikes as it tries to temper inflation.