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VOL. 129 | NO. 31 | Friday, February 14, 2014

US Businesses Boost Inventories as Sales Slow

CHRISTOPHER S. RUGABER | AP Economics Writer

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WASHINGTON (AP) – U.S. businesses restocked their shelves and warehouses at a faster pace in December, but sales slowed, a cautionary sign for the economy.

The Commerce Department said Thursday that inventories rose 0.5 percent after a 0.4 percent increase in November. Sales growth fell to just 0.1 percent, from 0.7 percent in November.

The figures point to a risk for the economy: if companies build their stockpiles at a faster pace than their sales are growing, they may end up stuck with more goods than they need.

That would force them to cut prices sharply and sell at discounts in order to clear the extra inventory. Businesses would also likely order fewer goods, weighing on factory production.

Retailers' stockpiles rose 0.6 percent, while their sales were flat in December, the report said. Manufacturers and wholesalers increased their inventories by a smaller amount. Manufacturers' sales fell, while wholesalers' sales rose at a slower pace than in November.

A separate report Thursday showed that retail sales fell 0.4 percent in January as extremely cold weather kept shoppers at home. Auto sales fell sharply.

The decline in January retail sales suggests that companies will need to reduce their stockpiles in the first few months of this year. That's likely to slow economic growth in the January-March quarter.

Rising inventories helped boost growth in the second half of last year. A big increase in stockpiles during the July-September quarter contributed two-fifths of that period's surprisingly robust 4.1 percent annual growth rate. Rising inventories contributed another 0.4 percentage point to the October-December quarter's 3.2 percent growth.

But slower restocking will likely slow growth in the January-March quarter to about 2 percent to 2.5 percent, economists forecast.

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 This material may not be published, broadcast, rewritten or redistributed.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 81 217 5,290
MORTGAGES 94 276 6,985
FORECLOSURE NOTICES 22 72 1,628
BUILDING PERMITS 384 712 12,691
BANKRUPTCIES 66 241 5,541
BUSINESS LICENSES 27 85 2,146
UTILITY CONNECTIONS 52 234 7,292
MARRIAGE LICENSES 10 53 1,511

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