Bloomberg News

Stockpiles at U.S. Companies Were Little Changed in September

November 15, 2011

Nov. 15 (Bloomberg) -- Inventories in the U.S. were little changed in September as sales climbed, a sign companies may need to boost orders in coming months to meet holiday demand.

The reading followed a revised 0.4 percent gain in stockpiles in August that was smaller than initially estimated, the Commerce Department said today in Washington. The median projection in a Bloomberg News survey was for a 0.1 percent increase. Sales climbed 0.6 percent in September to reach the highest level since July 2008.

Businesses kept enough goods on hand to last 1.27 months at the current sales pace in September, close to the record low of 1.24 months reached earlier this year. Another report today showed retail sales rose more than projected in October as Americans snapped up Apple Inc. iPhones and demand for automobiles improved, giving the world’s largest economy a boost entering the final quarter of 2011.

“Demand has been sufficient to prevent any significant restocking from taking place,” Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, said before the report. “At some point production has to be ramped up to satisfy demand and also to replenish inventories. What we saw in the third quarter makes us optimistic that output will accelerate further.”

Inventory estimates ranged from decreases of 0.1 percent to increases of 0.5 percent in the Bloomberg News survey of 44 economists. August stockpiles were revised from a previously reported 0.5 percent gain.

Retail Sales

Sales at retailers rose 0.5 percent last month following a 1.1 percent increase for September, other Commerce Department figures showed today. Purchases of electronics jumped by the most in two years.

Other reports showed wholesale prices dropped in October and manufacturing in the New York region expanded in November for the first time in six months.

The producer price index declined a more-than-projected 0.3 Percent, the first decrease in four months, as the cost of energy and automobiles decreased, according to the Labor Department. Economists forecast a 0.1 percent decrease, according to the Bloomberg survey median. The so-called core measure, which excludes volatile food and energy, was unchanged, marking the first time without an increase since November 2010.

The Federal Reserve Bank of New York’s general economic index rose to 0.6, the first positive reading since May, from minus 8.5 in October. Economists projected the gauge would rise to minus 2, based on the median of 48 forecasts. Readings higher than zero signal companies in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, are expanding.

Retail Stockpiles

Retailers’ inventories, the only part of today’s stockpile report not previously released, dropped 0.1 percent in September as sales increased 1.1 percent.

“Customers continue to manage their inventories very carefully,” Harlan Kent, chief executive officer of Yankee Candle Co. Inc., which sells its products to retailers like Macy’s Inc., Walgreen Co. and Target Corp., said on a Nov. 10 call with investors. “We are in good shape to quickly respond to replenishment orders and capitalize on any uptick in consumer demand.”

Factory inventories, which account for about 38 percent of total stockpiles, grew 0.1 percent in September, the Commerce Department said Nov. 3. Another 30 percent of inventories, held by wholesalers, fell 0.1 percent during the month, figures showed Nov. 9.

Production Boost

The reports signal companies kept an even tighter rein on stockpiles last quarter than previously estimated, which puts factories on track to boost production as demand grows.

Inventories were rebuilt at a $5.4 billion annual pace, down from the second quarter’s $39.1 billion rate, the Commerce Department said Oct. 27. The reduction subtracted 1.1 percentage points from GDP growth.

The world’s largest economy expanded at 2.5 percent pace from June to August. Excluding inventories, the economy grew at a 3.6 percent annual rate, up from a 1.6 percent in the April through June period.

--With assistance from Kristy Scheuble in Washington. Editor: Carlos Torres

To contact the reporter on this story: Alex Kowalski in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

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