U.S. Wholesale Inventories Climb More-Than-Forecast 1.1% Amid Sales Growth

Inventories at U.S. wholesalers rose more than forecast in January as distributors tried to keep pace with sales that rose by the most since November 2009.

The 1.1 percent increase in stockpiles followed a revised 1.3 percent gain in December that was bigger than initially estimated, the Commerce Department said today in Washington. The median projection in a Bloomberg News survey was for a 0.9 percent rise. Sales jumped 3.4 percent in January, led by cars, computers and commodities.

The amount of goods in inventory compared with purchases matched a record low in January, pointing to further gains in manufacturing, the mainstay of the expansion. Stockpiles may add to growth this quarter as businesses try to keep more on shelves.

“It’s a sign of strength in the economy,” said Eric Green, chief market economist at TD Securities Inc. in New York, who projected a 1 percent gain in January. “You saw a big correction in the pace of inventory growth last quarter, and now it’s going to be very supportive of growth.”

Estimates of 35 economists in the Bloomberg survey ranged from increases of 0.2 percent to 1.5 percent. December inventories were revised from a previously reported 1 percent gain.

Stocks fell, sending the Standard & Poor’s 500 Index down for the third time in four days. The S&P 500 dropped 0.4 percent to 1,316.87 at 10:10 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year note to 3.53 percent from 3.55 percent late yesterday.

January Imports

The rise in wholesale inventories signals that imports in January probably also increased. The Commerce Department will issue trade balance figures tomorrow. The median forecast of economists surveyed by Bloomberg is for a $41.5 billion deficit compared with $40.6 billion a month earlier.

Inventory rebuilding, a major driver of the early stages of the economic recovery, slowed in the fourth quarter as sales jumped. Stockpiling subtracted 3.7 percentage points from the 2.8 percent gain in gross domestic product, according to the Commerce Department.

At the current sales pace, wholesalers had enough goods on hand to last 1.13 months in January, matching the record low that was reached in April 2010.

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 1.1 percent in January, led by automobiles, computers and hardware, today’s report showed. Durable goods sales rose 2.3 percent.

Non-Durable Goods

The value of non-durable goods inventories, which may reflect increased commodities costs, climbed 1.2 percent as purchases surged 4.4 percent.

Companies like Mattel Inc. (MAT) the world’s largest toymaker, are adjusting inventories to meet increasing demand this year after the jobless rate fell to a near two-year low, presaging a jump in consumer spending, the largest part of the economy.

“This year, we’re going to start with inventories in pretty good shape,” Robert Eckert, chief executive officer at Mattel, said on a Feb. 2 teleconference. “We’re committed to building inventories more in the first half of the year relative to the second half in order to run the supply chain more efficiently than we did last year.”

The El Segundo, California-based company said higher sales of its Barbie brand boosted fourth-quarter profit above analysts’ estimates.

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, grew 1.3 percent in January, the Commerce Department said March 4. Retail stockpiles, which make up the rest, will be included in the March 11 business inventories report.

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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

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