Is the Long Awaited Inventory Correction About to Explode?

Posted on Thursday, October 8, 2009

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Bloomberg details:

Inventories at U.S. wholesalers dropped in August for a 12th consecutive month, clearing the way for a pickup in orders as sales improve.
The 1.3 percent decrease in stockpiles was larger than anticipated and followed a revised 1.6 percent drop in July, figures from the Commerce Department showed today in Washington. Wholesale inventories have had the longest series of declines since records began in 1992. Sales climbed 1 percent, the biggest gain since June
2008.
Distributors will likely increase bookings after companies drew down inventories at a record pace in the first half of the year. The gains may give the world's largest economy a boost in the early stages of a recovery as American factories rev up assembly lines to prevent stockpiles from dwindling even more.
"The degree of decline has been extreme and will likely slow in coming months," said Guy LeBas, chief economist and fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. "But, we're not looking for a sharp uptick."