Sales at U.S. wholesalers climbed in December for a ninth consecutive month, leading to an unexpected drop in stockpiles that may keep spurring orders.
Purchases increased 0.8 percent after a 3.6 percent gain in November, the Commerce Department reported today in Washington. Inventories fell 0.8 percent following a revised 1.6 percent increase that was the largest in more than five years.
A record inventory drawdown last year has opened the door for factories to pick up production, leading a recovery from the worst recession since the 1930s. Another report showed job openings climbed in December for the first time in three months, signaling employers are gaining confidence the expansion will be sustained in coming months.
“This is a very positive backdrop,” said Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. in New York, who correctly forecast the drop in stockpiles. “It bodes strongly for continued gains in production in the first part of the year.”
There were 63,000 more jobs available in December, bringing total openings to 2.5 million, a report from the Labor Department also showed today. Manufacturers and retailers were among industries with the biggest increases in employment opportunities.
Workers per Job
With 15.3 million Americans out of work that month, it means there were about six workers vying for each opening in December.
The figures indicate that the world’s largest economy, which expanded in the second half of 2009, may soon add jobs after employment unexpectedly dropped last month. Payrolls fell by 20,000 in January after a 150,000 decline in December, according to Labor Department figures released on Feb. 5.
The unemployment rate unexpectedly dropped to 9.7 percent from 10 percent, last week’s report also showed.
Stocks maintained earlier gains after the reports on speculation that Greece will get European help with its budget deficit. The Standard & Poor’s 500 Index climbed 1.3 percent to 1,070.83 at 12:51 p.m. in New York. Treasury securities fell.
Confidence among small businesses increased in January for the first time in three months as the outlook for sales improved, a report from the National Federation of Independent Business also showed.
Small Businesses
The group’s optimism gauge climbed to 89.3, the highest level in 16 months, from 88 in December, the Washington-based organization said today. The advance left the measure close to the 2009 low of 81 reached in March, which was second only to a 1980 reading as the lowest on record.
“This is very disappointing for an indicator of the health of the most critical segment of the economy in terms of new job creation,” said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York.
At the current sales pace, it would take wholesalers 1.12 months to deplete goods on hand, the fewest since a record-low 1.11 months in June 2008.
Efforts to rebuild depleted inventories contributed 3.4 percent points to gross domestic product in the fourth quarter, the most in two decades.
Factory Rebound
Private reports suggest stockpile rebuilding has continued to help boost production. The Institute for Supply Management’s factory index rose to 58.4 in January, the highest since August 2004, and the survey’s gauges of production and new orders rose.
Inventories of durable goods, or those meant to last at least three years, decreased 1.1 percent in December and sales increased 3 percent.
Distributors of machinery, automobiles and metals led the drop in stockpiles as sales increased. Purchases of machinery jumped 7.5 percent, the most in records dating back to 1992.
“The sales numbers are strong,” said David Sloan, a senior economist at 4Cast Inc., a New York forecasting firm. “If sales continue to rise, inventories are poised to be rebuilt.”
Rockwell Automation Inc.’s profit fell in the fiscal first quarter less than anticipated, and the company raised its 2010 forecast. Demand was strongest in the U.S., led by sales of software and orders from recovering industries including automakers, Chief Executive Officer Keith Nosbusch said in an interview Jan. 27.
Companies “de-stocked to the point where any need had to be filled immediately, one to one, as opposed to before where they were able to take it out of their inventory supply chain,” Nosbusch said.
Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which account for about 38 percent of the total, fell 0.1 percent in December, the Commerce Department said Feb. 4. Retail stockpiles make up the rest and will be included in the Feb. 11 business inventories report.
By Courtney Schlisserman – businessweek.com
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