Tuesday, February 15, 2000
U.S. sales rate gains on inventories
The Associated Press
WASHINGTON — U.S. companies boosted their inventories by a modest 0.5 percent in December, but their sales vaulted ahead at more than twice that pace, a sign that businesses are struggling to keep up with hardy demand, economists said.
For the 12th straight month, companies added to their stockpiles of goods on shelves and backlots, pushing total business inventories in December to a seasonally adjusted $1.14 trillion, the Commerce Department said Mon day.
At the same time, sales grew by 1.1 percent in December to $868.8 billion.
That increase brought the inventory-to-sales ratio to a record low of 1.32, meaning that it would take 1.32 months to exhaust inventories at the December sales pace.
“All of this reflects a struggle by companies to keep up with strong consumer demand,” said economist Clifford Waldman of Waldman Associates. “The strength in consumption is almost overpowering the business world.”
The Federal Reserve, which has boosted interest rates four times since June, is always on the lookout for signs that demand is outpacing supply, a condition that can lead to a sharp increase in prices.
“Businesses are hard-pressed to keep up with strong demand,” First Union economist Mark Vitner said. “Some retailers and wholesalers have shown a little more pricing power, but it's still pretty small.”
The Fed's rate increases have raised borrowing costs for businesses and consumers. But many analysts still think the central bank will boost rates again in March because the economy is growing too rapidly.
Retailers reported a 1 percent increase in inventories in December to $369.2 billion. That followed a 1.4 percent rise in November.
At wholesalers, inventories rose by 0.4 percent in December to $305 billion after a 1.3 percent jump the month before. And, at factories, inventories grew by 0.2 percent to $470.9 billion after a 0.5 percent increase.
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U.S. sales rate gains on inventories
