Businesses boosted stockpiles 0.4 percent

This Jan. 25, 2012 photo, shows hydraulic couplings ready for shipping at the Eaton Corp. plant in Berea, Ohio. Businesses restocked at a faster pace in December, a positive sign that they expect consumer demand to rise. (AP Photo/Mark Duncan)

This Jan. 25, 2012 photo, shows hydraulic couplings ready for shipping at the Eaton Corp. plant in Berea, Ohio. Businesses restocked at a faster pace in December, a positive sign that they expect consumer demand to rise. (AP Photo/Mark Duncan)

WASHINGTON (AP) ? Companies restocked at a faster pace in December, a positive sign that they expect consumers to step up spending.

Business stockpiles grew 0.4 percent in December, the Commerce Department said Tuesday. That followed a similar gain in November. Sales rose 0.7 percent, almost double the November gain.

Companies are building up their stockpiles again after cutting them over the summer amid recession fears. Higher inventories require more production, which boosts economic growth. It also suggests companies expect more sales.

Rising inventories were a key reason growth accelerated in the final three months of last year. Still, some economists expect the restocking to slow this year.

Wholesalers reported a 1 percent increase in inventories. Retailers reported a 0.2 percent gain and manufacturers 0.1 percent.

Inventories rose to a seasonally adjusted $1.56 trillion in December. That is 18 percent above the low point reached in 2009, just after the recession ended.

Rising sales are keeping stockpiles from getting too high. If companies feel their inventories are excessive, they could cut back on orders, slowing the economy.

Overall sales rose in December. Wholesalers reported a 1.3 percent jump in sales, followed by a 0.7 increase for manufacturers and flat sales for retailers. That pushed down the ratio of inventories to sales to the lowest level since March. A lower ratio suggests inventories aren't out of line with sales.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-02-14-Business%20Inventories/id-eddea7a396b24bfc99b4b92a6b3d67d8

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