US Business Inventories Rise Suggest Economic Growth Boost

18 Mar 2013

U.S. business inventories rose by the most in more than 1-1/2 years in January as sales fell, suggesting restocking of warehouses will boost economic growth this quarter.

The Commerce Department said on Wednesday inventories increased 1.0 percent, the largest increase since May 2011, after rising 0.3 percent in December.

Economists polled by Reuters had expected inventories to rise 0.4 percent. Automobile inventories rose 1.9 percent, the biggest gain since July, after increasing 1.1 percent in December.

Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos - which go into the calculation of gross domestic product - rose 1.3 percent. That was the largest increase since August 1995 and followed a 0.6 percent rise in December.

Inventories subtracted 1.6 percentage points from fourth-quarter GDP, helping to hold down economic growth to a 0.1 percent rate in the final three months of 2012.

Economists expect businesses to step-up their accumulation of stocks, which were depleted by relatively strong demand in the fourth quarter.

Business sales fell 0.3 percent in January, mostly on the back of declines in autos and furniture, after edging up 0.1 percent the prior month.

At January's sales pace, it would take 1.29 months for businesses to clear shelves, the most since August. That was up from 1.28 months in December.

Source: http://www.cnbc.com/id/100548727