Inventories at wholesalers in the U.S. unexpectedly declined in November, raising concerns that strong economic indicators at the end of 2010 will fail to carry over into 2011, according to Bloomberg. The Commerce Department reported on Tuesday that wholesale inventories dropped 0.2% in November, defying economists’ forecast for a 1% increase after a 1.7% gain the month before. The drop was the biggest in nearly a year while sales rose 1.9%, which brings the ratio of inventory to demand to a five-month low.
Economists like Russell Price of Ameriprise Financial feel, “Inventory levels are probably going to maintained rather than significantly ramped up or significantly cut,” while the recovery gains momentum. Price said inventories would likely start to ramp up once the economy is on more solid footing. The government saw inventory rebuilding drive economic growth in the early stages of the economic recovery, but that trend is expected to fade as inventories stabilize and overall growth picks up.