WASHINGTON – U.S. wholesale businesses restocked faster in April, responding to a strong gain in sales. The increase could be a good sign for economic growth in the April-June quarter.
The Commerce Department says stockpiles grew 0.6 percent at the wholesale level in April, double the March gain. Sales by wholesale businesses jumped 1.1 percent in April, nearly three times the March sales gain.
Stockpiles at the wholesale level stood at $483.5 billion in April. Thats 25.6 percent above the post-recession low of $384.9 billion in September 2009.
It would take roughly five weeks to exhaust all wholesale stockpiles at the April sales pace. Thats considered a healthy time frame and suggests businesses will keep restocking.
When businesses step up restocking, they order more goods. That generally leads to increased factory production and higher economic growth.
Slower growth in inventories held back growth in the January-March quarter, when the economy grew at an annual rate of 1.9 percent.
The increase in wholesale inventories was bigger than economists had forecast. That could signal that inventory growth will pick up and boost economic growth in the April-June quarter.
But stockpile growth largely depends on the spending habits of U.S. consumers and businesses.
Weaker job creation in April and May could force some to scale back spending. And pay has risen just 1.7 percent over the past 12 months. Thats slower than the rate of inflation for that period.