By Shobhana Chandra March 10 (Bloomberg) — Inventories at U.S. wholesalers unexpectedly fell in January for a second month, signaling companies had difficulty keeping pace with demand. The 0.2 percent decline in the value of stockpiles followed a revised 1 percent decrease in the prior month, the Commerce Department said today in Washington. Sales jumped 1.3 percent, the most since November, after a 1.2 percent gain. Rising orders at companies such as Texas Instruments Inc. indicate production will keep increasing in coming months to bring inventories more in line with sales. Efforts to replenish stockpiles helped the economy expand at a 5.9 percent annual pace in the fourth quarter, the fastest in more than six years. “We expect companies to increase inventories over the course of 2010, which will contribute to growth,” Kim Whelan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “It’s just a question of how fast they are willing to add to inventory.” Inventories at wholesalers were forecast to rise 0.2 percent after a previously estimated drop of 0.8 percent for December, according to the median estimate of 33 economists surveyed by Bloomberg News. Estimates ranged from a decline of 0.5 percent to a gain of 0.9 percent. At the current sales pace, wholesalers had enough goods on hand to last 1.1 months, the lowest since record-keeping began in 1992 and down from 1.12 months in December. Sales have increased for 10 straight months. Wholesalers make up about 30 percent of all business stockpiles . Factory inventories, which make up about 38 percent of the total, climbed 0.2 percent in January, the Commerce Department reported on March 4. Retail stockpiles, which make up the rest, will be included in the March 12 business inventories report. Fourth Quarter Companies slashed stockpiles at a record pace last year when demand slumped. As sales began to revive, efforts to rebuild inventories contributed 3.88 percentage points to gross domestic product in the fourth quarter. Recent reports suggest the replenishment of depleted stockpiles will lift production in coming months. The Institute for Supply Management’s manufacturing gauge was 56.5 in February, the seventh consecutive month of growth. Texas Instruments , the second-largest U.S. chipmaker, said quarterly profit and sales will be at the high end of its forecasts, fueled by increasing demand for computers, high- definition TVs and cars. The Dallas-based company also projects an increase in stockpiles compared with the prior quarter. Orders ‘Strong’ “We do expect to be able to build some inventory this quarter,” Vice President Ron Slaymaker said on a conference call with analysts on March 8. “Both revenue as well as orders quarter to-date have remained strong.” Today’s figures showed wholesalers’ stockpiles of durable goods, or those meant to last several years, fell 0.5 percent in January after declining 1.1 percent in the prior month. Distributors of machinery and professional equipment showed the biggest declines in inventories. Vehicle inventories dropped 0.2 percent, after decreasing 2.5 percent the prior month, while auto sales rose 2.6 percent in January, the most since October, today’s report showed. Inventories of nondurable goods showed a 0.3 percent gain, reflecting higher-priced petroleum. Sales of non-durable goods rose 2 percent, after a 0.2 percent decrease a month earlier. The value of petroleum sales rose 2 percent. To contact the reporters on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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Wholesale Inventories in U.S. Unexpectedly Decline 0.2% as Sales Advance
