U.S. Wholesalers Cut Stockpiles to Lowest Level in 17 Months

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U.S. Wholesalers Cut Stockpiles to Lowest Level in 17 Months

wholesale inventories stockpiles in february drops economy

 

Wilfredo Lee/APShipping containers are shown stacked at the Port of Miami in January. Data released Tuesday show U.S. wholesalers cut restocking in February to levels not seen in 17 months.

By CHRISTOPHER S. RUGABER
WASHINGTON — U.S. wholesalers cut their restocking in February by the most in 17 months. But their sales jumped, suggesting companies underestimated consumer demand.

The Commerce Department said Tuesday that stockpiles at the wholesale level declined 0.3 percent in February. That followed a 0.8 percent increase in January, which was revised lower.

The decline was the first in eight months and the biggest since September 2011. Farm products and gasoline led the drop. Agriculture stockpiles have fallen in recent months because of a drought in the Midwest.

Sales at the wholesale level rose 1.7 percent, the most since November. The increase was led by large gains in gasoline, clothes and computers.

Shrinking stockpiles weigh on economic growth because it means factories are producing fewer goods. But a jump in consumer spending in February suggests companies will have to build their stockpiles faster in the coming months, which should spur more growth.

 

Sluggish growth in stockpiles was a key reason the economy barely grew in the October-December quarter. But economists are looking for a significant rebound in business restocking this year, helped by a resilient consumer that has continued to spend despite paying higher taxes.

Most economists expect growth accelerated in the January-March quarter to an annual rate of more than 3 percent. That would be a vast improvement over the 0.4 percent growth in the final three months of 2012.

In January, Social Security taxes rose on nearly all Americans who draw a paycheck. The increase leaves a person earning $50,000 with about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.

But Americans spent more in January and February. Many analysts now expect consumer spending rose by about 3 percent at an annual rate in the first quarter. That would be much faster than the fourth quarter’s 1.8 percent pace.

The jump in spending will likely force many companies to order more goods to restock their shelves.

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April 11, 2013 at 7:45 AM