Trade has been a drag on Gross Domestic Product (GDP) for six consecutive quarters. The increase in imports in January was largely due to the rebuilding of inventories.
Wholesalers’ inventories increased 0.8%. Retail inventories gained 1.9%, driven by a 2.4% increase in motor vehicle inventories.
Excluding motor vehicles, retail trade inventories rose 1.7% after advancing 3.9% in December. This component enters into the calculation of GDP growth.
Inventory investment increased at a seasonally adjusted annualized rate of $171.2 billion in the fourth quarter. Most economists see more scope for inventories to rise, noting that inflation-adjusted inventories remain below their pre-pandemic level.
Inventories contributed 4.90 percentage points to the 7.0% annualized growth rate in the fourth quarter. Stock restocking, after three consecutive quarters in which they were reduced, is supporting the industry.
In other data released Monday, the Chicago PMI survey’s US activity index fell to 56.3 in February, according to data released Monday. A Reuters poll of analysts had forecast the figure to come in at 63.0 in February .
