US businesses boost restocking 1 percent

Associated Press

U.S. companies increased their restocking in January from December, an encouraging signal that they expect consumers will spend more this year and help the economy grow faster.

The Commerce Department said Wednesday that business stockpiles grew 1 percent in January. That’s up from 0.3 percent growth in December and the biggest gain since May 2011.

Total business sales fell 0.3 percent in January after a slight 0.1 percent rise in December.

Weak growth in restocking was a key reason the economy barely grew from October through December. Since then, job growth has accelerated and wages have steadily risen. The combination could lead to greater consumer demand, prompting more business restocking and economic growth.

A separate report Wednesday showed that retail sales rose 1.1 percent in February, providing evidence that consumers are being helped by the stronger wage growth.

Retail stockpiles also increased 4 percent. Wholesale stockpiles grew 1.2 percent, the biggest gain in 13 months. Stockpiles held by manufacturers rose 0.5 percent.

The economy grew only 0.1 percent rate in the fourth quarter. Still, sharp defense cuts and sluggish restocking, both volatile factors, were the main reasons for the weak growth.

Economists say faster restocking in the current quarter should help lift growth to around 2 percent in the January-March period.

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