By Jeff Bater And Jeffrey Sparshott
U.S. wholesale inventories rose in January more than expected and sales surged, reflecting higher oil prices as well as suggesting confidence among businesses about the economic recovery.
Wholesale inventories rose by 1.1% to a seasonally adjusted $436.88 billion, the Commerce Department said Wednesday. That's the highest level since November 2008.
Economists surveyed by Dow Jones Newswires had expected wholesale inventories would begin 2011 with a 0.9% increase.
The bigger-than-expected gain came even though sales rose by 3.4% to $386.97 billion, the highest level since July 2008. Sales for cars and petroleum were strong.
The government revised up sales in December, to an increase of 1.1% from a previously estimated 0.4%. Inventories that month rose 1.3%, revised up from a previously estimated 1.0% increase.
The report on wholesalers provides an indication on consumer spending, which is a big part of the U.S. economy. Their spending drives sales of companies and boosts production by manufacturers. Wednesday's data provided a sign of confidence among businesses.
Other reports about the economy's performance in early 2011 have been mixed. Credit-card use, for instance, fell in January, the 28th drop in 29 months, the Federal Reserve reported this week. Spending by U.S. consumers slowed as well. But unemployment, while still high, has been abating, dropping last month to 8.9%.
Inventories are a component of gross domestic product, which is the broad measure of economic activity in the U.S. Wholesalers account for about 30% of all business inventories in the U.S., with manufacturers and retailers making up the rest.
Coming out of the recession, companies stocked up fiercely on goods to fill empty shelves and meet rising demand. Then, firms began easing their stockpiling, with inventory accumulation slowing sharply in the fourth quarter of 2010 and subtracting from economic growth.
Since January 2010, inventories were 11.9% higher, while sales were up 15.4%.
Wednesday's report said the amount of wholesale goods on hand relative to sales in January dipped. The inventory-to-sales ratio, which measures how many months it would take for a firm to deplete its current inventory, fell to 1.13 from 1.15 in December. The decrease, to the lowest level since April 2010, suggests wholesalers will have to order more goods to met future demand--which is good for factories.
In January, wholesalers' inventories of goods designed to last three or more years rose 1.1%. Sales of these so-called durable goods climbed by 2.3%.
Non-durable goods inventories increased 1.2%, while non-durable goods sales increased 4.4%. Big gains in petroleum inventories and sales drove those increases amid rising oil prices.
