Enough With the “Unexpected” Already

The Commerce Department is reporting that wholesale and factory inventories fell in January:

March 10 (Bloomberg) — Inventories at U.S. wholesalers unexpectedly fell in January for a second month, signaling companies had difficulty keeping pace with demand.

The 0.2 percent decline in the value of stockpiles followed a revised 1 percent decrease in the prior month, the Commerce Department said today in Washington. Sales jumped 1.3 percent, the most since November, after a 1.2 percent gain.

Rising orders at companies such as Texas Instruments Inc. indicate production will keep increasing in coming months to bring inventories more in line with sales. Efforts to replenish stockpiles helped the economy expand at a 5.9 percent annual pace in the fourth quarter, the fastest in more than six years.

“This indicates that inventories are broadly in balance at the wholesale level and that the period of massive inventory liquidation is over,” said Steven Wood, president of Insight Economics LLC in Danville, California. It “should give way to a period of modest inventory accumulation.”

The report is being characterized as “unexpected”. Enough, already.

There’s good news and bad news here. The good news is that, if demand holds, falling inventories mean that we should see some increased restocking and restocking means more manufacturing activity and more manufacturing activities could mean higher demand for workers.

The bad news is that .2% is an extremely small amount. I’d bet a shiny new dime that such a margin is in fact smaller than the margin of error.