Bloomberg News

Companies in U.S. Boosted Inventories in February as Sales Rose

April 16, 2012

Companies in the U.S. increased inventories in February as sales picked up, indicating factories will probably keep receiving orders as businesses rebuild stocks.

The 0.6 percent rise followed a revised 0.8 percent advance the prior month, the Commerce Department reported today in Washington. The median projection in a Bloomberg News survey called for a 0.6 percent gain. Sales climbed 0.7 percent after a 0.4 percent gain in January.

Inventory swings may diminish in the first half of 2012 after helping the economy grow in the fourth quarter at the fastest pace in more than a year. Another report today showed retail sales rose almost three times more than projected, showing consumers are weathering the jump in gasoline prices heading into the second quarter.

“As domestic demand holds up, then we could possibly see inventories build as suppliers try to meet the rising demand, so that will certainly add to activity,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said before the report. “Inventories are not going to be the big factor that they were a year or two ago, but they still remain an important factor.”

The median forecast for business inventories was based on a Bloomberg survey of 46 economists. Projections ranged from gains 0.4 percent to 1 percent. January’s figure was revised from the 0.7 percent increase originally reported.

At the current sales pace, businesses had enough goods on hand to last 1.28 months, the same as in January. The last time the ratio was lower was in December.

Sales Increase

Retail sales climbed 0.8 percent last month after a 1 percent advance in February, another report from the Commerce Department showed today. The median forecast of 81 economists surveyed by Bloomberg called for a rise of 0.3 percent. Eleven of 13 categories showed increases.

Also today, other data showed manufacturing in the New York region expanded in April at the slowest pace in five months, a sign the pickup in factory production is moderating. The Federal Reserve Bank of New York’s general economic index decreased to 6.6 this month, less than the most pessimistic forecast in a Bloomberg survey, from 20.2 in March. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.

Employers in the U.S. boosted payrolls less than forecast in March, the Labor Department said earlier this month. The 120,000 increase in jobs was the smallest in five months. The unemployment rate fell to 8.2 percent from 8.3 percent.

Retail Inventories

Retailer stockpiles, the only part of today’s data not previously reported, climbed 0.6 percent in February as sales jumped 1.1 percent. That caused the number of goods on hand to drop to a 1.32 months’ supply from 1.33 months in January.

Wholesale inventories, which make up about 30 percent of all stockpiles, rose 0.9 percent, the same as the Commerce Department reported last week, following a 0.6 percent gain. Factory stockpiles increased 0.4 percent.

Greenbrier Cos. Inc., in Lake Oswego, Oregon, increased its production of railcars and ships in the past year and has accumulated inventory in part to lock in favorable pricing, Chief Executive Officer William Furman said.

“If you ramp up manufacturing four times where you were a year ago, that fact alone will cause heavy buildings of inventories and other items on the balance sheet,” Furman said in an April 9 earnings call.

To contact the reporters on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net; Shobhana Chandra in Washington at schandra1@bloomberg.net

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


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