October Wholesale Inventories, Sales Rise Strongly

Thursday, 09 Dec 2010 10:26 AM

 

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Business inventories at the wholesale level rose for the 10th straight month in October while sales were up by the largest amount in seven months.

The Commerce Department reported Thursday that wholesale inventories rose 1.9 percent in October, a much larger gain than many economists were expecting. Sales jumped 2.2 percent, the biggest increase since March.

The strong gains in both inventories and sales were encouraging signs that manufacturers will continue to see demand boosted by business efforts to restock depleted store shelves. Inventory rebuilding has been a key factor supporting the economy's efforts to recover from the 2007-2009 recession.

The 1.9 percent rise in October inventories followed an even larger 2.1 percent jump in September and pushed wholesale inventories to $427.1 billion, 9.9 percent above the level of a year ago.

Many businesses embarked on a massive liquidation of inventories in early 2009 as they struggled to cope with a deep recession and plunging demand by keeping costs under control.

The swing from slashing inventories to rebuilding stockpiles has provided significant support to the recovery. Economists believe that for businesses to continue boosting inventories they will need to see further gains in sales.

That has been a concern as households, still fearful about high unemployment, have not boosted their purchases as much as they have in previous more normal rebounds.

The big jump in sales at the wholesale level in October reflected a 25.9 percent surge in demand for farm products including grains and livestock. That was the largest one-month rise since a record 27.6 percent increase in November 2009.

The ratio of inventories to sales was unchanged in October at 1.18, the same as September. That means it would take 1.18 months to deplete existing stockpiles at the October sales pace.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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