AP News

Ahead of the Bell: US wholesale inventories

WASHINGTON (AP) — The Commerce Department reports on how much wholesalers adjusted their inventories in December and how much their sales changed. The report will be released at 10 a.m. EST Tuesday.

BUILDING STOCKPILES: Wholesalers have been stockpiling more goods amid rising sales. The trend is expected to continue in December. Increasing inventories add to economic growth.

NOVEMBER DECELERATION: Wholesalers increased their inventories by 0.5 percent in November, down sharply from the October gain of 1.3 percent. The October increase had been the biggest one-month jump in more than two years.

Sales rose solidly both months — up 1 percent in November and 1.1 percent in October.

Rising stockpiles boost growth because they reflect expanding production at factories. Bigger inventories accounted for more than 40 percent of economic growth in the July through September period last year when gross domestic product increased at a robust 4.1 percent annual pace. The surge in stockpiles slowed the last three months of 2013, and overall growth fell back to a still-healthy 3.2 percent.

The government tracks inventories held by wholesalers, manufacturers and retailers. A report covering all inventory levels comes out Thursday.

MIXED SIGNALS: Economists had hoped 2014 would be a breakout year for the U.S. economy, still struggling to regain full strength nearly five years after the Great Recession ended. But recent economic reports have sent out conflicting signals.

Consumer spending, which drives 70 percent of U.S. economic activity, rose at a solid pace in December. Consumer confidence has also been healthy. Unemployment has fallen to a five-year low 6.6 percent.

But two straight months of weak job growth have raised questions about the economy's strength. Employers added a disappointing 113,000 jobs in January and just 75,000 in December. And part of the drop in unemployment — from 7.2 percent in October — has been caused by Americans dropping out of the job market, which means they can no longer be counted among the jobless.

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