Bloomberg News

Stockpiles at U.S. Companies Increase 0.5% as Autos Rebound

October 14, 2011

Oct. 14 (Bloomberg) -- Inventories at U.S. companies rose more than forecast in August as businesses anticipated faster growth in sales.

The 0.5 percent increase in stockpiles matched the advance in July that was larger than initially estimated, the Commerce Department said today in Washington. The median projection in a Bloomberg News survey was for a 0.4 percent advance. Sales climbed 0.3 percent in August.

The biggest jump in auto and parts stockpiles in more than a year signals supply-chain constraints from Japan’s March disaster have abated. The gain in goods on hand also indicates companies are prepared for improving demand after a report today showed retail sales rose more than forecast in September, easing concern slumping confidence and scant hiring will derail spending.

“Businesses haven’t lost heart, they are just using their heads,” David Semmens, a U.S. economist at Standard Chartered Bank in London, said before the report.

Estimates for stockpiles ranged from gains of 0.1 percent to 0.8 percent in the Bloomberg News survey of 49 economists. July stockpiles were revised from a previously reported 0.4 percent advance.

Purchases at retailers advanced 1.1 percent in September, the biggest in seven months, other Commerce Department figures showed today. The median forecast of 85 economists surveyed by Bloomberg called for a 0.7 percent rise last month.

A report from the Labor Department showed prices of imported goods unexpectedly rose in September, reflecting a jump in metals and higher costs of crude oil that have since receded. The 0.3 percent gain followed a revised 0.2 percent decrease in August.

Retail Inventories

Retailers’ inventories, the only part of today’s stockpile report not previously released, climbed 0.8 percent in August, the most in five months, as sales increased 0.3 percent.

Auto and parts stockpiles increased 1.5 percent, the biggest gain since August 2010.

Toyota Motor Corp., the world’s largest car maker, is ramping up its U.S. inventory levels to catch up with demand after plant shutdowns earlier in the year due to Japan’s March earthquake.

“Virtually all of our plants are working overtime, and fourth quarter production will actually exceed our initial plans,” U.S. sales vice president Bob Carter said on an Oct. 3 conference call. “The flow of Toyota, Scion, and Lexus vehicles is rapidly increasing and so will all our inventories.”

Factory inventories, which comprise about 38 percent of total stockpiles, grew 0.4 percent in August, the Commerce Department said Oct. 4. Another 30 percent of inventories, held by wholesalers, grew 0.4 percent during the month, figures showed Oct. 7.

Goods on Hand

At the current sales pace, businesses had enough goods on hand to last 1.28 months in August, the same as in the prior month, according to today’s figures.

The economy expanded at a 1.3 percent annual rate in the second quarter after growing at a 0.4 percent pace in the first three months of this year, the weakest six-month period of the recovery that began in June 2009. Stockpiles subtracted 0.3 percentage point from gross domestic product in the second quarter, while in the prior quarter they added 0.3 point, Commerce Department figures showed on Sept. 29.

--Editor: Carlos Torres

To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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