The second estimate for January wholesale inventories holds at a 0.4 percent decrease, the first draw since the pandemic summer of 2020. Contraction in nondurables makes up the bulk of the draw, led by a 5.5 percent drop in apparel and a 3.5 percent draw for farm products. Petroleum inventories were an offset, rising 1.3 percent. Looking at durables, they too fell, down 0.1 percent led by furniture, lumber and professional equipment. Auto inventories were also down, 0.5 percent lower.

Sales at the wholesale level rose 1.0 percent in January split between a 0.7 percent rise for durables (autos up 1.2 percent) and nondurables up 1.3 percent (petroleum up 4.5 percent).

Forecasters see a 0.4 percent decline in wholesale inventories for January after an increase of 0.1 percent in December.

Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a slower rate of growth that won't lead to inflationary pressures. Wholesale sales and inventory data give investors a chance to look below the surface of the visible consumer economy. Activity at the wholesale level can be a precursor for consumer trends. In particular, by looking at the ratio of inventories to sales, investors can see how fast production will grow in coming months. For example, if inventory growth lags sales growth, then manufacturers will need to boost production lest product shortages occur. On the other hand, if unintended inventory accumulation occurs (i.e. sales did not meet expectations), then production will probably have to slow while those inventories are worked down. In this manner, the inventory data provide a valuable forward-looking tool for tracking the economy.