Sales have increased for several months in a row, including a respectable 0.5% rise in July. But manufacturers remained extremely cautious when it came to rebuilding stockpiles, with wholesale inventories falling a steep 1.4%.
That brought the inventories-to-sales ratio down to 1.23 from 1.26, which means it would take businesses 1.23 months to liquidate their goods on hand.
We are seeing gains in industrial production, and August’s release this week is expected to reveal a healthy increase. And regional and national surveys of manufacturing are signaling a turnaround in the sector.
But companies are taking a slow approach and we will likely see more destocking before businesses ramp up idle assembly lines.
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