US stockpiles at wholesale level expected to dip in January as sales stay weak

Economic Indicators Associated Press

The Commerce Department reports on U.S. wholesale inventories in January. The report will be released at 10 a.m. EDT Tuesday.

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WEAK STOCKPILES: FactSet analysts believe that stockpiles held by wholesalers will decline 0.5 percent in January while economists surveyed by FactSet, a data firm, are looking for sales at the wholesale level to fall 0.4 percent.

In December, wholesale inventories rose a slight 0.1 percent, the slowest increase in 17 months after a modest gain of 0.2 percent in November.

Sales in December fell 0.4 percent after having either fallen or been unchanged for five consecutive months.

Economists believe the slowdown in restocking in recent months has been in reaction to the weakness in sales. But analysts remain bullish that sales will rebound in 2015 and that businesses will respond by boosting their inventory rebuilding.

The economy added a solid 295,000 jobs in February, the 12th consecutive month of job gains above 200,000. It's the longest such stretch since 1994-95. The unemployment rate fell to a seven-year low of 5.5 percent but that improvement came primarily from people dropping out of the labor market, an indication that the job market has still not fully healed from the deep recession of 2007-2009.

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But analysts believe with the solid gains that have been made in employment, consumer spending, which accounts for 70 percent of economic activity, should strengthen further in 2015 and this will help propel the economy to growth above 3 percent, the strongest annual growth in a decade.

For the fourth quarter, the economy slowed to growth of just 2.2 percent, even slower than the government's initial estimate of 2.6 percent growth in the October-December period. Much of the downward revision reflected slower growth in inventories that the government had initially estimated.