Business sales are down as inventories expand, according to a Commerce Department report (link opens as PDF) for January released today.

Sales fell a seasonally adjusted 0.9% to $1,303 billion for January. A 1.9% drop in merchant wholesalers sales made the biggest dent, followed by a 0.6% dip for retailers and a 0.3% sales decrease for manufacturers.  In the last year, however, a 3.9% jump for merchant wholesalers provided the primary push for a 2.5% increase in total business sales.

As sales fell for January, inventories increased a seasonally adjusted 0.4% to $1,715 billion. Analyst expectations proved spot on, but the news still isn't good. This latest report mimics a January wholesale trade report released earlier this week, which showed sales fell 1.9% as inventories increased 0.6%. That sort of imbalance can bring unwanted risk for the months to come. In this business report, merchant wholesalers expanded inventories the most, up 0.6%.

To understand the rate at which goods are being made and sold, economists compute an inventories/sales ratio. Since sales dropped and inventories increased from December to January, the inventories/sales ratio jumped to 1.32, compared to December's 1.30 value. January 2013's inventories-to-sales ratio also clocked in at 1.30 .



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