For the first time in eight months, U.S. wholesalers' inventory levels declined in relation to sales, a positive sign that companies may be getting a handle on their inventories.
Inventories at U.S. wholesalers fell 1.5 percent in February while sales increased 0.6 percent, the Commerce Department reported this week. The inventory-to-sales ratio fell to 1.31 from 1.34--the first decline since June, but still above the 1.14 ratio in the same period a year ago.
In the short-term, analysts say reductions in inventory indicate companies placed fewer orders and factories produced fewer products. But it may signal a rebound later this year, according to various reports. As companies adjust their inventory levels to deal with the economic slowdown, they may be able to increase orders for new goods down the road.
The news follows last week's announcement from Commerce that U.S. factory orders rose in February, ending six straight months of declines.