Businesses, after slashing inventories for over a year, likely boosted stockpiles for a second-consecutive month in November. The hope is that businesses will begin restocking their depleted shelves, helping to support the economic recovery.
Economists surveyed by Thomson Reuters expected inventories to rise by 0.2 percent November. The Commerce Department will release the report at 10 a.m. EST Thursday.
The small gain expected for November would follow a 0.2 percent rise in October. The October increase marked the first rise in stockpiles following a slide of 13 consecutive declines.
The 13 months of declines in overall inventories was the longest stretch of weakness since a record 15 straight monthly drops during a period that covered the last recession in 2001.
Factories hold about one-third of all inventories, wholesalers hold 25 percent and retailers hold the rest.
The government reported last week that inventories held by wholesalers posted an unexpectedly strong gain in November of 1.5 percent while sales at the wholesale level shot up by 3.3 percent, the biggest gain in 10 months.
Economists hope that sustained sales increases will encourage businesses to restock depleted shelves, which will in turn mean higher orders to factories. But they cautioned that the initial jolt is likely to fade quickly if consumer spending, which accounts for 70 percent of the economy, falters in coming months because of high unemployment and tight credit conditions.
The overall economy grew at an annual rate of 2.2 percent in the July-September quarter after a record four consecutive declines in the gross domestic product, the country’s total output of goods and services.
An even stronger GDP performance is expected for the just-completed October-December quarter with much of that strength coming from businesses beginning to rebuild their stockpiles. Home Security Systems.
Tags: business inventories, businesses, economic recovery, recession, stockpiles
