Wholesale Inventories Down

U.S. businesses reduced 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 that U.S. businesses reduced inventories 1.3% in December, far worse than the 0.9% decline analysts expected. It was the largest cut since the record 1.5% in October 2001. Companies also cut their stockpiles for the fourth straight month.

Wholesale inventories fell 1.4% in December, the biggest amount in nearly 17 years and nearly double analysts’ expectations. Wholesale inventories make up about 25% of all business stockpiles; factories hold another third and the rest is held by retailers. Sales at the wholesale level dropped 3.6% in December, slightly steeper than analysts’ expectations, but less than November’s record 7.3% drop.