Today the Commerce Department released its report on Manufacturing and Trade Inventories and Sales for the month of January. Even though the Commerce Department counts manufacturing and trade sales among the four components of its Composite Index of Coincident Economic Indicators, the release of this report always seems to lag about a month behind most of the other monthly reports. If you can remember all the way back to January, that was the month that the economy generally took a beating because of all the terrible snowstorms. Well, Manufacturing and Trade Inventories and Sales for January were no exception.

During January, inventories rose by 0.6 percent, more than totally wiping out a revised 0.4 percent drop in December. Year over year, inventories grew at a rate of 5.8 percent. But, this was less than last month's annual change of 6.2 percent. The yearly growth rate of inventories has been trending downward since last April. So, despite the blip upward in January, it still appears that businesses are having some success in working down their excess stocks of goods.

Not unexpectedly, sales in January were down -- dropping 0.6 percent from the figure for December. This caused the year-over-year gain to drop to 3.2 percent, down from 4.5 percent for the year that ended in December. In 1992, 1993, and 1994 the sales growth rates were 4.24, 5.66, and 7.87 percent. Last month I was a little encouraged because the annual growth rate seemed to be gaining strength. But, I guess we'll just have to see some more data before we know what's really happening.

The buildup in inventories and slowdown in sales in January caused the inventories-to-sales ratio to rise by .01 to 1.41. This means that, at the current rate of sales, it would take 1.41 months to dispose of the current inventory.

In other news, today the Labor Department reported that new claims for unemployment benefits jumped by 32,000 to 384,000 during the week ending March 16. The jump was felt to be at least partially attributable to the GM strike. It looks like the strike will be clouding the picture on this data for awhile.

Despite the one-week jump, the more-smoothly-varying four-week moving average of jobless claims only rose by 250 -- from 364,000 to 364,250. On a year-over-year basis the four-week moving average was up 7.37 percent. But, this was lower than last week's revised figure of 7.54 percent and was the lowest reading of this variable since January 13.

Finally, today the Philadelphia Federal Reserve Bank announced the results of its March survey of manufacturers in the third district. In February the important general business index had a slightly positive edge with a reading of +3.8 on a scale from -100 to +100. A consensus of analysts opined that this indicator would rise another 2.5 points to a March reading of +6.3. Well, instead of that the index dropped 3.9 points to end March at the -0.1 level. So, all things considered, it looks like the manufacturing sector in Pennsylvania and southern New Jersey is currently at a standstill.

Byline: Lafferty (MF Merlin)