Gains reflect steady recovery in US
By Martin Crutsinger |
June 10, 2010, Thursday
|
Print Edition
Print Edition
INVENTORIES held by wholesalers rose for a fourth straight month in April while sales climbed for a 13th consecutive time. Both gains were encouraging signs that point to a sustained United States economic recovery.
Wholesale inventories added 0.4 percent in April after a 0.7 percent gain in March, US Commerce Department said yesterday.
Sales increased 0.7 percent in April, helped by higher demand for autos, lumber, computers and electrical equipment. The rise followed a 2.4 percent surge in March.
The hope is that a sustained rise in demand will prompt businesses to step up orders and restock depleted shelves. That would give a boost to factories and prompt them to increase hiring.
Since sales rose at a faster clip than inventories were rebuilt, the ratio of inventories to sales fell to 1.13, the lowest point on records that go back to 1992. At that rate, it would take only 1.13 months to clean out the remaining inventories at the April sales pace.
That is also viewed as a good sign for the recovery. It means businesses will keep having to restock depleted shelves. That leads to rising factory production and further support for the economic recovery. A year ago, the inventory to sales ratio stood at 1.36.
Inventories at the wholesale level had fallen for 13 consecutive months through September. Businesses went through a massive liquidation of their stocks in a struggle to contain costs during the recession.
The move away from slashing inventories to restocking has played an important role in supporting growth in the past two quarters. A rise in factory orders has made the manufacturing sector one of the strongest contributors to the economic recovery.
The overall economy, as measured by gross domestic product, grew 5.6 percent annually in the final quarter of last year, a surge lifted by a swing in inventories.
Wholesale inventories added 0.4 percent in April after a 0.7 percent gain in March, US Commerce Department said yesterday.
Sales increased 0.7 percent in April, helped by higher demand for autos, lumber, computers and electrical equipment. The rise followed a 2.4 percent surge in March.
The hope is that a sustained rise in demand will prompt businesses to step up orders and restock depleted shelves. That would give a boost to factories and prompt them to increase hiring.
Since sales rose at a faster clip than inventories were rebuilt, the ratio of inventories to sales fell to 1.13, the lowest point on records that go back to 1992. At that rate, it would take only 1.13 months to clean out the remaining inventories at the April sales pace.
That is also viewed as a good sign for the recovery. It means businesses will keep having to restock depleted shelves. That leads to rising factory production and further support for the economic recovery. A year ago, the inventory to sales ratio stood at 1.36.
Inventories at the wholesale level had fallen for 13 consecutive months through September. Businesses went through a massive liquidation of their stocks in a struggle to contain costs during the recession.
The move away from slashing inventories to restocking has played an important role in supporting growth in the past two quarters. A rise in factory orders has made the manufacturing sector one of the strongest contributors to the economic recovery.
The overall economy, as measured by gross domestic product, grew 5.6 percent annually in the final quarter of last year, a surge lifted by a swing in inventories.
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