According to figures released by the Commerce Department yesterday, the amount of inventory at U.S wholesalers increased in the month of November, jumping by 0.6 percent. That's the kind of good news that economics watchers are often wary of: While it signals increased economic activity, a growth in inventory often means that manufacturers can scale back in the coming months, so it's not necessarily a positive sign for the future.
But sales for wholesalers actually outpaced the rate at which inventories grew. Sales for wholesalers increased by 2.3 percent in November, which was up from a decrease of 0.9 percent the previous month.
What does that mean? Even with the increased inventory, wholesalers were left with enough goods on hand to last an average of just 1.19 months, which is the lowest that figure has been since last May. So inventories aren't overstocked at all, and thus this doesn't necessarily portend a slowdown in future economic activity. It's probably good news for our economy.
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