Today the Commerce Department released its January report on business activity at the wholesale level. During January, sales of merchant wholesalers were down 0.6 percent from the revised December level, but were up 5.7 percent since January a year ago.

Wholesalers were able to work down their inventory overhangs somewhat during November and December. But, in January, total wholesale inventories rose 0.7 percent from the revised December level. For the twelve months ending January, inventories built up by 8.0 percent.

In January the inventories-to-sales ratio for wholesalers was 1.33, up slightly from December's 1.32 ratio.

Also today, the Commerce Department issued its quarterly report on the U.S. trade deficit. This quarterly "Current Account Deficit" report differs from the monthly reports in that it includes investment income as well as goods and services.

Quarterly current account trade deficits declined in every quarter of 1995. And, the deficit for the fourth quarter was the lowest in two years. That's the good news. The bad news is that the total 1995 deficit of $152.9 billion was the second highest on record, surpassed only by the 1987 figure of $166.3 billion. The 1994 deficit ran a close third at $151.2 billion.

During 1995, net foreign purchases of U.S. Treasury securities were a record $99.1 billion, dwarfing the previous record of $36.9 billion set in 1992, and 1994's net foreign purchase figure of $33.8 billion. This goes a long way toward explaining last year's bull market in T-bonds. It may also help to explain the recent bond market nervousness.

While some are heralding last Friday's February employment report as a sure sign that the economy is accelerating, you certainly wouldn't draw that conclusion from today's report from the Atlanta Federal Reserve Bank. In it's February survey of manufacturers in Federal Reserve District 6, the Atlanta Fed found that its regional index of production had fallen from +3.7 to -9.0 from January to February.

During February, 19.8 percent of the firms surveyed reported that they had reduced their workforces. Only 9.2 percent reported increased hiring, and the remaining companies reported no change in employment.

Based on its survey, the Atlanta Fed determined that its new orders index had fallen from an already negative -6.9 to an even more negative -15.3. The finished goods inventories index dropped from 6.4 to -2.3, and the materials inventories index fell from -2.5 to -6.5.

There were no signs of price inflation from the Southeast. The raw materials price index declined from +6.9 to -3.2, and the finished goods price index slid from -2.8 to -13.4. So, the manufacturers are paying less for their raw materials and charging less for the goods they sell.

All things considered, there seemed to be little for manufacturers in the sixth district to cheer about in February.

The sixth district incorporates Alabama, Florida, Georgia, and parts of Louisiana, Mississippi and Tennessee.

Byline: Lafferty (MF Merlin)