U.S. business inventories slightly rose in December

Washington, DC, United States (4E) – A Commerce Department report released on Wednesday said that U.S. business inventories slightly grew in December, as businesses had extra stock on hand by the end of the year.

The agency said business inventories climbed 0.1 per cent in December compared to a 0.2 per cent rise in November, which is in line with estimate of economists surveyed by the Dow Jones Newswires.

Business inventories in December were up by 5.1 per cent compared to the same month in the previous year, while business sales gained by 3.6 per cent.

The modest rise in inventories was boosted by a 0.5 per cent jump in retail inventories, following 0.3 per cent gain in November. Retail inventories, with motor vehicles excluded, grew 0.3 per cent.

Inventories at manufacturers also jumped 0.1 per cent in December, while merchant inventories declined by 0.1 per cent.

If businesses expect demand to rise, they normally keep extra goods on hand. Sales in December increased 0.3 per cent to a seasonally adjusted $1.274tn driven by strong spending on dining out, furniture and autos, according to the Commerce Department report.

The amount of goods on hand in relation to sales stood at a ratio of 1.27 compared to an unrevised 1.28 reading in November, the inventory report also showed. The inventory-to-sales ratio represents the number of months a company needs to sell its current inventory.

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