The U.S. wholesale report
The U.S. wholesale report revealed a huge 1.2% January inventory increase that extended the big 1.1% December rise, alongside the more moderate 0.5% January gain for wholesale sales that tracked estimates after a -0.9 (-1.0%) December figure. Inventory gains have exceeded sales gains in every month since May, and analysts likely saw an additional inventory boost in recent months from the typically larger impact of oil price declines on the sales than inventories, alongside tariff "front running." The over-performance of inventories to sales for an eighth consecutive month in January allowed a rise in the inventory-to-sales (I/S) ratio to 1.34, from 1.33 in December and a much lower 1.25 ratio in May of 2018. Analysts expect Q4 GDP growth trimming to 2.3% from 2.6%, with a $1 B wholesale inventory boost that joins a $2 B boost for factory inventories. Analysts also expect downward bumps of $8 B for consumption, $2 B for exports, $5 B for public construction and $3 B for residential construction. Analysts expect a $1 B boost for imports that subtracts from GDP. Analysts still expect 1.6% growth for Q1 GDP. Analysts expect a 0.5% (was 0.3%) January business inventory rise after an upwardly-revised 0.7% (was 0.6%) December surge. Today's 1.2% January wholesale inventory surge accompanies a 0.5% factory inventory increase and an assumed 0.2% retail inventory drop.