Friday morning, the Commerce Department released its report on wholesale trade in the month of March, showing that wholesale inventories fell by more than expected. The report also showed a notable decrease in wholesale sales.

The report showed that wholesale inventories fell 1.6 percent in March following a revised 1.7 percent decrease in February. The drop in inventories exceeded economist estimates of a 1.0 percent decrease.

A notable decrease in inventories of durable goods contributed to the bigger than expected decrease, with inventories of durable goods falling by 2.4 percent. Inventories of non-durable goods edged down by a more modest 0.3 percent.

Peter Boockvar, equity strategist at Miller Tabak, noted that the drop in wholesale inventories could lead to a modest downward revision to first quarter GDP if it is followed by a decline in business inventories next week.

However, Boockvar added, Since we already know the big negative impact that the inventory drawdown had on first quarter growth, it won't matter and if anything will lead to more optimism that we'll get a stronger bounceback in replenishing inventories.

The Commerce Department also said that wholesale sales fell 2.4 percent in March after edging up 0.2 percent in February. While sales of durable goods fell 3.3 percent, sales of non-durable goods decreased by 1.6 percent.

With sales falling at a faster pace than inventories, the wholesale inventories-to-sales ratio edged up to 1.32 in March from 1.31 in the previous month. The ratio is well above the 1.12 recorded in the same month a year ago.

Next Wednesday, the Commerce Department is scheduled to release its report on business inventories in the month of March. Economists expect inventories to fall by 1.1 percent following a 1.3 percent decrease in February.

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