Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowU.S. businesses slashed inventories in December by the biggest amount in seven years as they coped with plunging sales in a dismal holiday season.
The Commerce Department reported today that inventories fell 1.3 percent in December, far worse than the 0.9 percent decline analysts expected. It was the largest cut since the record 1.5 percent in October 2001.
It also marked the fourth straight month that companies cut their stockpiles, matching a similar stretch of reductions that ended in August 2003.
The trend has prompted concerns that the economic downturn will gain intensity if businesses continue to pare inventories, potentially triggering further cutbacks in production and more layoffs.
The latest news on the employment front today showed nearly 5 million Americans continuing to draw jobless benefits late last month, and new requests again exceeding 600,000 as companies continue to lay off scores of workers.
The Labor Department said the number of initial jobless benefit claims dropped to a seasonally-adjusted 623,000, from an upwardly revised figure of 631,000 the previous week.
The 631,000 new claims was the highest tally since October 1982, when the economy was emerging from a steep recession, though the labor force has grown by about half since then.
The December cut in inventories on shelves and back lots followed a plunge in November that was revised higher, to 1.1 percent from 0.7 percent.
Please enable JavaScript to view this content.