The US business inventories in March posted their highest gain in 9 months, largely owing to increase in automobile inventories since 2013. Further, inventories at manufacturers, wholesalers and retailers also rose, contributing to the surge in overall stockpiles, indicating a revision over the economy’s weak estimates.
Total inventories rose 0.4 pct in March, the highest since June 2015, following 2.3 pct jump in auto inventories and 1 pct rise in retail inventories, the Commerce Department said on Friday. Stockpiles in the auto sector witnessed the highest rise since Oct, 2013, following 1.6 pct rise in February. The inventory-to-sales ratio for motor vehicles rose to 2.30 in March, the highest since April 2009.
The gross domestic product is expected to rise, given the surge in retail inventories (excluding autos), which significantly contribute to the nation’s GDP. The US government last month reported that inventories subtracted three-tenths of a percentage point from first-quarter GDP growth, helping to restrict economic growth to a 0.5 pct annualized rate, reports confirmed.
Business inventories outnumbered demand in the first half of 2015 despite the slow pace of accumulation. Business sales rose 0.3 pct in March, the largest increase in nine months, after falling 0.3 pct in February. Meanwhile, the retail inventory-to-sales (I/S) ratio rose to 1.52 months, well above its year-ago level.
“A strong retail sales report, however, suggests the I/S ratio will likely decline in April for retailers,” Wells Fargo Securities said in a research note.
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