RTTNews - Business inventories continued to decrease in the month of April, according to a report released by the Commerce Department on Thursday, with the report also showing a modest decrease in business sales for the month.
The report showed that business inventories fell 1.1 percent in April following a revised 1.3 percent decrease in March. Economists had expected the drop in inventories to match the 1.0 percent decrease originally reported for the previous month.
Commenting on the continued decrease, Peter Boockvar, equity strategist at Miller Tabak, said, It's the 6th straight month of 1 percent or more drops and reflects the dramatic inventory correction that our economy has experienced.
At the same time, it provides the backdrop for the bullish camp's case that the economy will get a lift from the subsequent inventory replenishment cycle, Boockvar added.
With the monthly decrease, inventories in the month of April were down 6.6 percent compared to the same month last year.
The continued decrease in inventories reflected a notable decline in inventories at merchant wholesalers, which fell 1.4 percent in April. Inventories for manufacturers and retailers both fell 1.0 percent.
As mentioned above, the Commerce Department also said that business sales edged down 0.3 percent in April after a more notable 1.8 percent decrease in March. Business sales were down 17.3 percent compared to the same month a year ago.
While merchant wholesales reported a 0.4 percent decrease in sales in April, sales by retailers and manufacturers fell by 0.3 percent and 0.2 percent, respectively.
With inventories falling at a faster rate than sales, the business inventories/sales ratio edged down to 1.43 in April from 1.44 in March. The ratio compares to 1.27 in the same month last year.
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