Bush Concerned As Wholesale Inventories Rise, Productivity Falls
Following Tuesday’s economic reports, a White House spokesman said President Bush remains very concerned about the state of the U.S. economy. Separately, Vice President Dick Cheney told CNN that the country could still slide into recession.
The rise in inventories is important for trucking companies, because if businesses see their shelf stocks pile up they will have to sell many of those goods before having more manufactured and delivered.
So, while an inventory adjustment is under way to eliminate large unsold stockpiles, it can distort normal flows of trucked freight until normal supply-demand patterns resume.
Productivity is credited as a vital part of the long-lasting U.S. expansion. When workers' productivity grows, companies can produce more while holding down costs. However, the report showed costs grew at the fastest pace in over three years.
While February’s 0.2% decline in wholesale inventories – the first decline in two years – had given analysts some hope the worst was over, the 0.1% percent rise in March was a clear sign that the inventory correction is not over, Bloomberg reported.
Much of the decline was caused by a 1.3% decline in sales, the biggest month-to-month fall since January 1996.
Another negative note in the inventory report was the stock-to-sales ratio, a measure of how long it would take to totally deplete stocks at the current sales pace. It rose to 1.32 months in March, up from a revised 1.30 months in February.
That is important for dry van freight because when the ratio moves higher, it means companies will have to work down their current supplies on hand before having more goods shipped.
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