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Business Inventories Grow For 15th Straight Month

Thu, 05/12/2011 - 8:25am
Martin Crutsinger, AP Economics Writer

WASHINGTON (AP) — Businesses added to their stockpiles for a 15th straight month in March while their sales rose for a ninth consecutive month, suggesting factory production will remain strong in coming months.

The Commerce Department reported Thursday that businesses increased inventories 1 percent in March while sales rose an even larger 2.2 percent, the biggest sales gain in a year.

The rise in inventories pushed total stockpiles to $1.48 trillion. That is a level that economists consider to be normal for this stage of the recovery. It is 12.1 percent higher than the recent low of $1.32 trillion reached in September 2009.

Healthy gains in sales and inventory restocking should translate into strong orders to U.S. factories in coming months, spurring further gains in industrial production and manufacturing employment.

For March, inventories posted a 1.1 percent rise at both the manufacturing level and the wholesale level. Inventories held by retailers rose by 0.9 percent.

Sales were up strongly at all levels in March, led by a 2.9 percent rise in sales at the wholesale level.

Businesses had drastically slashed inventories during the recession as they struggled to contain costs. The switch back to inventory rebuilding has played a major role in boosting overall economic growth in this recovery, which began in June 2009.

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