© Thomson Reuters File Photo. Cyber Monday at the Amazon Fulfillment Center in Robbinsville, New Jersey.
WASHINGTON (Reuters) – US commercial production edged up in December as companies cautiously shifted into equities and the inventory-to-sales ratio hit a two-year high.
Business inventories rose 0.3% after a similar rise in November, the Commerce Department said on Wednesday. Resources are the main component of GDP. December growth coincided with economists' expectations.
Inventories rose 12.7% year-on-year in December. As higher borrowing costs contributed to the slowest domestic demand growth in 2.5 years, inventories rose in the fourth quarter on a build-up of mostly junk goods.
The Federal Reserve has hiked interest rates by 450 basis points from zero to 4.50% to 4.75% since March of last year, with most of the hike occurring between May and December. Two more hikes of 25 basis points are expected in March and May.
Retail goods rose 0.7% last month versus the 0.5% forecast in the previous report. In November they did not change. The surge in supply and the shift to consumption have left retailers with excess inventory, prompting some to offer discounts.
Auto inventories rose 1.4% last month versus 1.1% expected. rose 1.1% in November. Non-auto retail goods as a share of GDP rose 0.4% last month instead of 0.3% expected.
Inventories accounted for half of GDP growth at 2.9% last quarter, and if these unsold goods run out, the economy could slide into recession.
Wholesale goods rose 0.1% in December. The share of manufacturers increased by 0.4 percent.
Corporate sales fell 0.6% in December after falling 1.2% in November. At the pace of December sales, it took 1.37 months for companies to clear shelves. This is the longest reading since November 2020 and above the 1.35. November.
(Reporting by Lucia Muticani; Editing by Andrea Ricci)
