March 17, 2021
Wholesale activity continued expanding, while layoffs dropped, and consumers’ economic outlook improved.
Wholesale inventories rose to $661.7 billion at the end of January, which marked a 1.3 percent gain over December, the Census Bureau reported. Compared to the same period a year ago, January’s wholesale inventories were 0.6 percent over January 2020’s levels. Increased wholesale inventories indicate wholesalers’ anticipation of a rise in demand from the consumer sector, which drives roughly 70 percent of all U.S. economic activity.
Some key categories that helped drive January’s inventory gains included computer equipment, which grew 3.4 percent in January; professional equipment, which expanded by 2.8 percent; lumber, which was up 2.7 percent; pharmaceuticals, which increased 2.6 percent; and hardware, which rose 2.1 percent.
Meanwhile, wholesale sales grew to $531.7 billion in January, which was 4.9 percent over December’s sales, and when compared to the same period last year, had grown 5.9 percent from January 2020’s sales.
January’s gains helped narrow the inventory-to-sales ratio to 1.24. A declining ratio comes as welcome news because it reflects an increasing demand for wholesale goods.
Consumer outlook improved in March, with the Index of Consumer Sentiment rising to a score of 83 for the month, which was up 8.1 percent from February’s score of 76.8, according to last week’s preliminary results from the University of Michigan Surveys of Consumers. Compared to the same period a year ago, this was 6.8 percent below March 2020’s score of 89.1.
The Index of Current Economic Conditions, which describes how consumers feel about the current state of the economy and their place in it, grew to 91.5 for March, which was 6.1 percent over February’s ranking of 86.2. Compared to the same period a year ago, this was 11.8 percent below March 2020’s score of 103.7.
The Index of Consumer Expectations, which assesses how consumers feel about where the economy is headed, also improved in March, rising to 77.5, which was 9.6 percent over February’s score of 70.7. Compared to last year, March’s score was 2.8 percent below March 2020’s ranking of 79.7.
“Consumer sentiment rose in early March to its highest level in a year due to the growing number of vaccinations as well as the widely anticipated passage of Biden’s relief measures,” noted Surveys of Consumers Chief Economist Richard Curtin in comments accompanying the release. “The gains were widespread across all socioeconomic subgroups and all regions, although the largest monthly gains were concentrated among households in the bottom third of the income distribution as well as those aged 55 or older.”
Initial Jobless Claims
Looking at weekly layoffs data, initial jobless claims filed by recently unemployed Americans during the week ending March 6 fell to 712,000, a drop of 42,000 claims from the previous week’s 754,000 claims, the Employment and Training Administration reported last week.
The four-week moving average, which is considered a more stable measure of jobless claims, declined to 759,000, which was 34,000 claims lower than the preceding week’s average of 793,000 claims.
While still very high, claims for the week of March 6 were nearly at their lowest level since March 2020, when the COVID-19 caused a spike in layoffs.
“The numbers look encouraging on the face of it,” Oxford Economics’ Chief U.S. Economist Gregory Daco told the New York Times.
This week, we can expect:
Tuesday – Retail sales for February and business inventories for January from the Census Bureau; import prices for February from the Bureau of Labor Statistics; industrial production and capacity utilization for February from the Federal Reserve.
Wednesday – Housing starts for February from the Census Bureau and Department of Housing and Urban Development.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for February from The Conference Board.
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