Manufacturing Inventories, Output Decline

Date: April 18, 2016

Weaker Overseas Markets, Stronger Dollar Credited For Declines

According to the latest Commerce Department data, US business inventories fell 0.1% in February and sales declined 0.4%. According to the AP, “U.S. manufacturers have seen exports fall as weakness in major overseas markets cuts into sales” and the rising US dollar makes US products more expensive overseas.

Meanwhile, the Federal Reserve also posted its latest data on industrial output and capacity utilization. Bloomberg News reported the Federal Reserve said that manufacturing output in the US “unexpectedly declined in March by the most since February 2015, indicating factories remain scarred by global challenges that are slow to dissipate.” Bloomberg added that the 0.3% decline at factories, “which make up 75 percent of production,” followed a revised 0.1% drop the preceding month.

What This Means For Small Businesses

NFIB’s latest Small Business Economic Trends report indicated that small business owners are less optimistic about the economy. For March, the net percent of small business owners that saw increased inventories was -3%, while the net percent of owners that thought inventories were currently too high fell by 3 points to a net -5%. NFIB said “these weak inventory investment readings are consistent with the rather dismal view owners have about future sales and economic progress.” Commenting on the results, NFIB Chief Economist Bill Dunkelberg cautioned that the small business sector is currently “underperforming, doing little more than operating in maintenance mode.”

Additional Reading

MarketWatch also reported on inventory declines.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

Related Content: Small Business News | Economy | National

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