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U.S. Wholesale Inventories Rose Again in April, But Growth Slowed

Published 06/08/2022, 11:02 PM
Updated 06/08/2022, 11:02 PM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. wholesale inventories rose again in April, but at their slowest pace in three months, amid signs that high inflation is starting to hurt final consumer demand. 

Inventories rose 2.2% from a month earlier, but March's figures were revised to show a bigger rise of 2.7%, up from an initial estimate of 2.3%. 

The numbers suggest that the turbocharged demand from consumers for manufactured goods is starting to at least revert to more normal levels, after a two-year sugar rush fueled by fiscal and monetary policy stimulus.

That surge in demand, coupled with occasional shortages of product availability due to supply chain problems, had driven the ratio of inventories relative to company sales to a record low last year, a level that it almost touched again at the start of 2022. 

The Census Bureau said that the gradual reversion of that ratio to more normal levels continued in April, rising to 1.25 from 1.23 in March and 1.21 a year ago.

Inventories rose particularly strongly in the apparel sector, corroborating reports by a spate of fashion companies in recent weeks that have warned of rising levels of unsold product. Apparel inventories rose 6.4% after a 4.0% rise in March. 

Few other sectors showed similar problems, however. The slow recovery of inventory in the automotive sector continued with a 1.3% rise in April, but that represented a slowdown from 2.4% in March. 

On Tuesday, big box retailer Target (NYSE:TGT) had shocked the stock market with its second profit warning in three weeks, saying it would have to slash prices to reduce unsold merchandise volumes. The news was taken as a sign of consumer demand weakening, but other figures released on Wednesday showed that any such trend is being cushioned by Americans resorting more to their credit cards to finance spending. 

Consumer credit rose by another $38 billion in April, after a downwardly-revised $47.3 billion in March, according to the Federal Reserve. Revolving credit, which consists mainly of credit card balances, grew at an annualized rate of 19.6% to break its pre-pandemic record of $1.1 trillion.

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