Inventories Provide More Bad News for Jobs

More

Inventories barely grew in May -- by a rate of just 0.1%, according to the Census Bureau. That's the lowest growth we've seen since December. This trend is a concern, because it indicates that businesses aren't anticipating much additional demand for their products going forward. Without that demand, they won't feel any urgency to hire additional workers.

First, here's the chart:

inventory change 2010-05.PNG

As you can see, over the past few months, growth has been trending down. If it goes negative again, and businesses begin to allow inventories to fall, then this would indicate a very sour view of their economic expectations.

Of course, recent sales numbers indicate that they're probably right about a weak recovery. Little inventory growth paired with declining sales caused the inventory-to-sales ratio to rise in May:

inventory-to-sales 2010-05.gif

This also isn't great in the context of few new jobs. If sales growth isn't keeping up with inventory growth, businesses aren't going to feel any need to dip into the pool of the 15-17 million unemployed Americans for extra help.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

Why Are Americans So Bad at Saving Money?

The US is particularly miserable at putting aside money for the future. Should we blame our paychecks or our psychology?


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

Just In