US Stockpiles Rise as Sales Fall: Analysts Predict Subdued Growth in Third Quarter

In some negative news for the US economy, it was reported today that cheaper oil and lower demand for autos and machinery weighed on wholesalers in August as their inventories edged up just slightly while sales dropped. According to a report released by the Commerce Department, it was stated that wholesale stockpiles rose 0.1 percent and sales fell 1 percent. It is important to point towards the fact that sales have slid 4.7 percent over the past 12 months while inventories have increased by 4.1 percent. Many analysts on the street believe that the strong dollar is one of the key reasons for the drop in sales as US exports have become less competitive on the global stage.

According to the report, oil inventories which is measured in dollars, plummeted by 4.6 percent in August and by 36.6 percent over the past 12 months. Sales of autos and machinery have also slipped. Many believe that sales weakened as the broader economy began to cool in August hampered mostly by the overall slowdown seen in the global economy. It is imperative to state that a slowdown in the Chinese economy triggered alarms about corporate profits which resulted in a stock market sell-off over the last month. It was also reported that Canada slipped into a recession while growth in emerging markets continue to remain subdued.

The slowdown seems to be affecting the labour markets too. The US economy added 142,000 jobs in the month of September according to a report released by the Labour Department last Friday well below the 3 month average of 324,333 at the end of 2014. Economists on the street have cut their growth forecasts for the third quarter and expect the US economy to grow by 1.5 percent which is being seen as a huge negative by traders.

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