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Ahead of the Bell: Business Inventories

Ahead of the Bell: Business Inventories

June 13th, 2012 in News

WASHINGTON (AP) - U.S. companies likely kept restocking in April, but at a slow pace.

The Commerce Department will report business inventories at 10 a.m. Wednesday. The consensus is that stockpiles grew 0.3 percent in April, according to a survey by FactSet. That would match March gains, but the pace is still well below the 0.8 percent and 0.6 percent increases seen in January and February when companies ramped up restocking efforts to keep up with strong sales growth. In part, that demand reflected a mild winter that might have spurred customers to spend early at the expense of later months.

When businesses increase their pace of restocking, they order more goods. That typically supports higher factory production and faster economic growth. But consumers must keep spending for businesses to continue restocking at a healthy pace. Economists say the current pace of inventory rebuilding is consistent with moderate growth.

In the first three months of this year, the economy grew at an annual rate of 1.9 percent. That's down from the 3 percent growth rate in the October-December quarter but better than the 1.7 percent growth recorded for all of 2011.

Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total, and manufacturing inventories represent about 40 percent.