The March rebound for wholesale inventories unexpected evaporated in the Commerce Department’s second estimate.
Wholesalers in the U.S. did not expand their inventories in March, the government said Monday.
Economists had forecast the second estimate to continue to show a tenth of a percentage point growth. The behavior of inventories around business cycles is complex. Inventories can shrink because businesses find themselves loaded with too much stock after a disappointing holiday sales season, for instance. Alternatively, they can shrink if sales are brisker than expected. Businesses can also shrink inventories in anticipation of falling demand.
On the other hand, leaner inventories could be good news for GDP in the second quarter and ahead. The first quarter decline has convinced some economists that much of the inventory liquidation has been completed. Businesses may now have begun restocking, which would be a tailwind for GDP.
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