Does This Commerce Department Report Bode Well for Q1 GDP Growth?

The Commerce Department’s monthly report on business inventories showed that a slow pace of warehouse restocking weighed down fourth-quarter economic activity. On Wednesday, the department said that manufacturers’ inventories and trade inventories, adjusted for seasonal variations but not for price change, grew only 0.1 percent in December, making a slight gain with the help of increases in trade sales and manufacturers’ shipments.

December’s end-of-month inventory level of $1.62 trillion missed the 0.3 percent increase expected by analysts polled by Thomson Reuters, and it was below the 0.2 percent gain made in November.

Business inventories are a measure of the dollar amount of inventories held by manufacturers, wholesalers, and retailers. Rising inventories can be an indication that businesses are optimistic that sales will grow in the next few months. But even more importantly, inventory is an important statistic for economists to track because it represents a key component of gross domestic product…