Could Inventories Be Suffering an Amazon Effect?

NEW YORK (TheStreet) -- News that wholesale inventory growth came in at a lower-than-expected .3% for December, rather than rising .5% as forecast, led to trader fretting today.

The question is whether this reflects a coming slowdown of the U.S. economy.

The government's gauge of the ratio between wholesale inventories and monthly sales stood at 1.17, seasonally adjusted, against 1.19 a year ago, the Department of Commerce said. This is much lower than it was near the start of 2013, closer to the ratio of early 2011 than some traders wanted to see.

The inventory estimates are based on a survey, however, and the results are seasonally adjusted, with the highest sales-to-inventory ratios in durable goods like hardware and machinery, where there's nearly two months' supply on hand, seasonally adjusted, and the lowest ratios in non-durables like petroleum, drugs and groceries.

The inventory ratio for petroleum inventories, .30%, was down 11.5% from a year ago, 5.1% from a month earlier, and may be behind the recent rise in energy prices, with West Texas Intermediate crude now over $100/barrel and natural gas prices for March at over $4.50 per mcf. Propane is currently in very short supply, and the California drought is impacting beef supplies, driving prices up. 

Absent seasonal adjustments, however, the changes seen in the December number don't look that bad. Petroleum sales were up 19.2% over the previous month, due to the weather, and inventories were up 1.9% unadjusted. Auto sales were up 4.8% from the previous month, 8.4% from the same month a year earlier, and unadjusted inventories were down 3.2%.

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