According to the Commerce Department US inventories in November posted their largest drop since 2011. This statistic is a sign that businesses are reducing their stockpiles of unsold goods. Such reductions are a sign of significant slowing of economic growth in the fourth quarter of 2015.
Friday’s announcement said that inventories fell 0.2 percent, the largest decline since September 2011. October’s data showed a 0.1 percent drop. Reuters had forecast a 0.1 percent drop in November, but the data shows a drop of twice the prediction. Inventories are an important part of calculating the gross domestic product (GDP.)
Inventories in the retail sector, excluding the auto industry, rose by 0.2 percent in November.
During the first half of 2015 there was a record-breaking accumulation of goods which surpassed demand, leaving businesses stuck with unsold merchandise, causing a reduction in the orders for more goods. This is an important contributing factor to the significant downward direction in manufacturing activity.
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