Inventories at U.S. wholesalers jumped in January by the most in more than a year as companies shrugged off concerns about fiscal policy and ramped up in anticipation of rising consumer demand.
The 1.2 percent increase in stockpiles exceeded all estimates in a Bloomberg survey of economists and was the biggest since December 2011, figures from the Commerce Department showed today in Washington. Sales fell, reflecting a slump in non-durable goods including petroleum and farm products.
Distributors are restocking warehouses as consumer spending picked up at the end of 2012 as the holiday season drew shoppers and auto sales rebounded. Combined with another report today showing employment accelerated in February, the figures indicate the world’s largest economy is strengthening in early 2013.
“The economy looks like it’s on better footing,” said Sean Incremona, a senior economist with 4Cast Inc. in New York.
Payrolls increased more than forecast in February and the jobless rate unexpectedly fell to a four-year low of 7.7 percent, a sign employers were undaunted by the budget impasse in Washington, figures from the Labor Department also showed today.
Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate, the lowest since December 2008, dropped from 7.9 percent. Hiring in construction jumped by the most in almost six years.
Stocks were little changed as the jobs data spurred specualtion Federal Reserve policy makers may curtail stimulus. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,543.52 at 10:17 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 2.04 percent from 2 percent late yesterday.
The median forecast in a Bloomberg survey of 27 economists called for a 0.3 percent gain. Estimates ranged from increases of 0.1 percent to 0.9 percent. The prior month’s figure was revised to a 0.1 percent gain from a previously reported 0.1 percent decline.
At the current pace of sales, wholesalers had enough goods on hand to last 1.21 months, up from 1.19 months in December, the report showed.
Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 1.1 percent, boosted by machinery and computers. Sales of durable goods climbed 0.7 percent in December.
The value of unsold non-durable goods climbed 1.2 percent as sales dropped 2.1 percent.
Wholesalers, which make up about 30 percent of all business stockpiles, might be feeling the effects of improved consumer confidence as Americans looked beyond budget rancor in Congress and continued to spend.
Steinway Musical Instruments Inc. (LVB) is increasing production with new hires, boosted capital spending and added inventories. The manufacturer of pianos and band instruments, based in Waltham, Massachusetts, has been able to raise prices as consumer demand strengthens.
“We’ve been in an under-inventoried position and the fact that inventory dropped is not necessarily where we want to be,” Chief Executive Officer Mike T. Sweeney said on a March 6 earnings call. “We expect 2013 to be a good year overall and have ramped up production accordingly.”
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