Wholesale Inventories in U.S. Increase 0.6% as Sales Surge

Inventories at U.S. wholesalers rose more than forecast in November as companies tried to keep up with a surge in demand.

The 0.6 percent increase in stockpiles followed a 0.3 percent rise in October that was less than initially estimated, the Commerce Department said today in Washington. The median forecast in a Bloomberg survey called for a 0.2 percent gain. Sales jumped 2.3 percent, the most since March 2011, as auto demand rebounded from a superstorm Sandy-related drop.

The acceleration in purchases left wholesalers with enough goods on hand to last 1.19 months at the current sales pace, the lowest since May. Stabilization in global growth and clarity on U.S. budget issues may help bolster demand and spur companies to step up orders.

“If you look at sales over the final two months of the year, this was a good thing,” Brian Jones, a senior U.S. economist at Societe Generale in New York, said before the report. “They were building inventories and importing cars in anticipation of solid year-end demand.”

The median forecast for wholesale inventories was based on a Bloomberg survey of 23 economists. Estimates ranged from a decrease of 0.4 percent to a 0.9 percent gain after an initially reported 0.6 percent advance in October.

Another report today showed initial jobless claims climbed to 371,000 last week from 367,000. A consistent decline in firings, along with a rise in payrolls, is needed to spur consumer spending, the biggest part of the economy.

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.4 percent, led by autos, electrical equipment and machinery, today’s report showed. Demand for goods meant to last at least three years surged 2.7 percent, the biggest gain since December 2011.

Vehicle Sales

Auto sales jumped 2.8 percent in November, the most since January, rebounding from a 2.9 percent slump the prior month that may have reflected the influence of Sandy, which closed some East Coast ports. Auto purchases ran at a 15.3 million annual rate in December after 15.5 million the prior month, the best two months since early 2008.

Unsold non-durable goods rose 0.8 percent as sales climbed 2 percent. Stockpiles of pharmaceuticals, food and petroleum increased.

Retailers such as Macy’s Inc. and Ralph Lauren Corp. have improved their inventory management in recent years, keeping them from having to resort to steep discounts to prevent merchandise from piling up. The strategy will show up in a company’s gross margin, or the portion of sales left after subtracting the cost of goods.

Retail Discounts

The companies are increasingly using sophisticated analytics in planning discounts for customers, deciding how much to order based on previous sales and industry-wide demand, Megan Donadio, a New York-based retail strategist for consulting firm Kurt Salmon, said in a Dec. 26 interview with Bloomberg News.

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, were unchanged for a second month in November, the Commerce Department said Jan. 4. Retail stockpiles will be included in the business inventories report due Jan. 15.

November sales at retailers rose as holiday shoppers snapped up electronics and clothes, Commerce Department data showed Dec. 13. Car sales jumped last month to a four-year high, in part because Americans in Sandy’s path replaced damaged vehicles.

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