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Tags: Businesses | Inventories | Demand

Businesses Boost Inventories to Meet Rising Demand

Thursday, 12 January 2012 10:45 AM EST

Businesses increased their stockpiles in November to meet rising consumer demand, a gain that likely boosted economic growth in the final months of last year.

Inventories rose 0.3 percent in November, the Commerce Department said Thursday. That followed October's 0.8 percent gain. Sales increased 0.3 percent after a 0.6 percent October increase.

Companies are building up their stockpiles again after cutting them over the summer amid fears of another recession. The increase is a positive sign for growth because it means many businesses are filling their shelves in anticipating of higher consumer spending.

Inventories rose in November to a seasonally adjusted $1.55 trillion. That was 17.7 percent above the low hit in the recession year of 2009.

Manufacturing stockpiles grew 0.5 percent to lead all categories. Retail inventors gained 0.3 percent and stockpiles at the wholesale level were up 0.1 percent.

Sales at the wholesale level increased 0.6 percent in November, retail sales rose 0.4 percent and manufacturing sales were unchanged. A separate report Thursday showed that retail sales edged up a slight 0.1 percent in December.

This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy's best last year. The report pointed to higher holiday and auto sales, along with increased travel.

The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8.5 percent, the lowest in nearly three years.

Many analysts predict that economic growth rose to an annual rate of roughly 3 percent in the final three months of 2011. That would be an improvement from the summer, when the annual rate was just 1.8 percent. And it's much better than the 0.9 percent growth rate in the first six months of 2011.

Many businesses reduced their inventory restocking in the summer after consumer spending slowed last spring in the face of higher food and gas prices. The slowdown, along with supply disruptions caused by March's earthquake in Japan, weakened U.S. manufacturing and contributed to worries of another recession.

Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total and manufacturing inventories represent about 41 percent of the total.

© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Thursday, 12 January 2012 10:45 AM
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