Washington, DC, Jun. 15--Business inventories posted a stronger-than-expected increase during April, while sales fell slightly as companies replenished some stocks that had been trimmed by hot demand. Inventories increased 0.5% to a seasonally adjusted $1.212 trillion, after an unrevised 0.7% advance in March, the Commerce Department said.
Forecasters has projected an advance of 0.4%.
Inventory gains have been strong this year--but so have sales. Year over year, inventories climbed 3.0% from April 2003 to April 2004, with sales up 11.3%. Analysts see continued rebuilding of stocks. Some say demand is strong enough to justify continued robust production in order to build inventories.
The economy has been gathering steam over the past year. The popular yardstick of gross domestic product climbed 3.1% in 2003, up from 2002's 2.2% and a paltry 0.5% gain in 2001. A recent survey released by the National Association for Business Economics forecast 4.7% growth in 2004 and 3.8% in 2005.
The report Tuesday showed business sales eased 0.1% in April, after climbing an upwardly revised 3.2% the previous month.
The inventory-to-sales ratio held at 1.30. The ratio, an indicator of how well firms are matching supply with demand, measures how long it would take in months for a firm to sell all of its current inventory.
Lean inventories provide a sign businesses are unlikely to reduce orders or output, which can bode well for employment.
Retail inventories went up 1.1% in April, after rising 1.2% the month before. Auto inventories rose 2.0%. Excluding the auto component, retail inventories would have gone up 0.6%.
General merchandise stores inched up 0.1%. Food store inventories went up 0.6%. Stockpiles at furniture stores rose by 0.8%, while inventories at building materials, garden equipment and supplies stores advanced 1.2%. There was a 0.7% climb in clothing inventories.
April wholesale inventories went down by 0.1% and factory inventories rose 0.4%. The Commerce Department already released that information in separate reports this month.
