July Inventories Drop, Sales Rise
In a nice little blip of good news, July inventories dropped and sales rose, according to numbers released moments ago by the Commerce Department, fueling hopes of the beginning of a recovery.
In July, businesses slashed their inventories 1 percent, slightly more than expected, marking the 11th straight month of inventory reduction.
At the same time, sales rose by just the tiniest amount -- 0.1 percent -- after rising 1.1 percent in June. Statistically meaningless, however, it marks the first back-to-back monthly increases in sales in a year.
This sales number, by the way, is different from retail sales, which was reported today.
In a recession, businesses reduce inventory any way they can; typically by discounting prices. This means factories shut down.
Once, however, businesses get their inventory overhang down to a workable amount -- meaning, their shelves are actually starting to a look a little bare -- they will start putting orders back in to factories, which will start up again and hire back laid-off workers.
-- Frank Ahrens
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September 15, 2009; 10:26 AM ET
Categories: The Ticker | Tags: inventories, manufacturing
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Posted by: alwaysAlabama | September 15, 2009 5:05 PM | Report abuse
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