Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 15, 1991 TAG: 9102150121
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Commerce Department reported that business sales slowed to a seasonally adjusted $530.9 billion, even worse than the 1.5 percent decline in November and the biggest drop since they fell 3.1 percent in January 1987.
However, Thursday's report also had a touch of good news. It said business inventories in December dropped 0.7 percent, to a seasonally adjusted $810.7 billion, after advancing 0.2 percent in November and 0.4 percent in October.
In past recessions, big pileups of goods on shelves and back lots caused growing production cutbacks and job layoffs as businesses struggled to sell off their backlogs.
The activity pushed the ratio of inventories-to-sales to 1.53 from 1.5 in November. The ratio means it would take 1.53 months to exhaust the backlog at the December sales pace.
"Instead of waiting until later in the recession to cut back on inventories, companies clearly are cutting back early," said Bruce Steinberg, an economist with Merrill Lynch Capital Markets in New York. "To some extent, that will moderate the decline."
But at the same time, Steinberg said, "the consumer sector is retrenching at this point about as much as had happened in the early '80s and '70s" when the two deepest postwar recessions occurred.
In addition to the 1.5 percent decline in retail purchases, manufacturing sales plunged 3.4 percent after a 2.5 percent drop in November. Sales on the wholesale level were off 1.2 percent after falling 1.5 percent the previous month.
Retail inventories declined 0.8 percent in December and 0.2 percent in November. They were off a similar 0.8 percent on the manufacturing level and 0.3 percent on the wholesale level. Manufacturing inventories had risen 0.2 percent in November, while wholesale backlogs grew 0.7 percent.
by CNB