Wholesale inventories in the United States expanded steadily in March, and the pace of buildup in the previous month was faster than originally reported, suggesting a minor upward adjustment to the first-quarter GDP estimate, Reuters reports.
Wholesale inventories grew 2.3 percent in March, according to the Commerce Department, as reported last month. Stocks at wholesalers rose 2.8 percent in February instead of the 2.6% reported earlier, according to updated data.
March inventories were projected to remain unchanged, according to economists surveyed by Reuters. On a year-over-year basis, wholesale inventories increased by 22.0% in March. Inventories are an important component of GDP. After rising 1.9% in February, wholesale motor vehicle inventories increased by 2.4 percent.
In March, wholesale inventories, excluding vehicles, increased by 2.3%.
Inventory investment decreased in the first quarter after a strong performance in the third quarter, deducting 0.8 percentage points from GDP. The economy contracted at a 1.4% annualized pace in the first quarter as a result of this, paired with a record trade imbalance.
Following February’s higher adjustment, experts estimate that inventories detracted 0.6 percentage points from GDP, slowing the rate of output decrease to 1.3 percent.
After statistics last week indicated the spike in the trade deficit in March was more than what the government expected in its assessment of first-quarter GDP, economists predicted the rate of GDP contraction would be raised to 1.5 percent.
Later this month, the government will release its first GDP revision. March business inventory data, as well as any changes to March retail sales, industrial output, housing starts, and durable goods orders data, are all coming next week.
After increasing by 1.5 percent in February, wholesaler sales grew by 1.7 percent in March. Wholesalers would need 1.22 months to empty shelves at March’s sales rate, which is unchanged from February.
Demand is projected to fall as the Federal Reserve raises interest rates to combat inflation. Some economists fear that in a world with splintered supply chains, this might lead to an inventory imbalance and a recession.