Destocking continues at uninterrupted pace
Business inventories extended their streak to ten consecutive monthly declines as manufacturers continue to rid themselves of excess stockpiles left over from late last year when demand around the world fell dramatically.
Inventories dropped 1.1% in June, while sales increased 0.9%, pulling down the inventories-to-sales ratio, which measures how many months it would take to liquidate all goods on hand, from 1.41 to 1.38.
Leading indicators of manufacturing are showing signs of stabilization and new orders have recently moved into positive territory.
Based on sales, inventories are already back to where they were after the end of the 2001 recession (see chart provided by Commerce Dept), and it seems likely that manufacturers will soon begin to re-open idle production lines.
Industrial production on tap
Tomorrow’s release of industrial production for July is expected to show the first rise in industrial production in nine months.
Because weather across much of the country was unseasonably cool last month, utility production may weigh on the headline figure so a look at manufacturing production, versus industrial production, may provide a more reliable feel at what’s happening among goods-producers.
0 comments:
Post a Comment