Wholesale Inventories in U.S. Increase More Than Forecast

Inventories at U.S. wholesalers rose more than forecast in December as companies scurried to keep up with the biggest sales increase in nine months.

The 1 percent advance in stockpiles exceeded the median forecast of 30 economists surveyed by Bloomberg News and followed little change in November, Commerce Department data showed today in Washington. Purchases climbed 1.3 percent, the most since March, on growing demand for machinery and clothing.

At the current sales pace, wholesalers had enough goods on hand to last 1.15 months, the same as in the prior four months, the report showed. The need to replenish stockpiles, which helped the economy grow last quarter at the fastest pace in more than a year, may keep contributing to the expansion in early 2012.

“There could be a significant need for further accumulation in the current quarter, especially if demand is firming,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, said in a note before the report. “The need to restock inventories may actually be increasing.”

The median projection in the Bloomberg survey was a 0.4 percent gain. Estimates ranged from increases of 0.1 percent to 1 percent. The November figure was revised from a previously reported 0.1 percent gain.

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.7 percent, boosted by automobiles and machinery, today’s report showed. Sales of machinery increased 5.2 percent, the biggest gain since April 2005.

The value of unsold non-durable goods climbed 1.3 percent as sales advanced 0.4 percent. Demand for clothing jumped 5.3 percent, the most since November 2007.

Growth Pickup

The world’s largest economy expanded at a 2.8 percent annual rate in the fourth quarter after a 1.8 percent pace in the prior three months, Commerce Department figures showed on Jan. 27. Growth excluding a jump in inventories was 0.8 percent. Stockpiles were rebuilt at a $56 billion annual pace, adding 1.9 percentage points to growth.

The surge in stockpiles last quarter followed a reduction in the July through September period amid mounting concern that Europe’s debt crisis would restrain demand at a time the U.S. labor market was struggling to pick up.

Labor Department figures last week indicated demand may get a boost. Payrolls climbed by 243,000 workers in January, the biggest increase in nine months, and the unemployment rate fell to 8.3 percent, the lowest since February 2009.

Texas Instruments Inc. (TXT), the second-largest U.S. chipmaker, is among companies rebuilding stockpiles to prepare for an increase in sales.

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“We’re keeping inventory higher,” Ron Slaymaker, vice president at the Dallas-based company, said on a Feb. 7 conference call with analysts. “We’re much better positioned to support a wave of demand when it comes.”

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, rose 0.1 percent in December, Commerce Department data showed on Feb. 3. Retail stockpiles, which make up the rest, will be included in the business inventories report due on Feb. 14.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net Bob Willis in Washington at bwillis@bloomberg.net

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

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