The inventory reduction happened in the face of falling sales, indicating that companies are really cutting back production hard and fast. Cutbacks in production and weakness in orders made inflation all, but disappear at the wholesale level. Excluding autos, retail sales were unexpectedly weak in March. Americans have dialed back on spending given a weakening job market. This causes serious concern given that consumer spending accounts for two-thirds of all economy activity and consumer confidence is widely considered to be key to whether the economy will bounce back.
Stores provide a mixed picture.
Sears warned that its first-quarter earnings will miss Wall Street estimates, citing declining sales. The whipsaw action between the two months, plus the possibility that seasonal factors came into play, mitigate against giving March's data a lot of weight. In general durable goods data is volatile and swings drastically from month to month. The Nasdaq broke above the short-term declining trendline on moderate volume. The Volumentum line continues to climb, and Volumentum direction moved from bearish into neutral territory.