Wholesale sales rise 0.8%

inventories fall

February numbers show retailers had difficulty keeping shelves stocked

April 09, 2002|By BLOOMBERG NEWS

WASHINGTON - Sales at U.S. wholesalers rose in February to the highest level in half a year, setting the stage for a rebound in manufacturing and a sustained economic recovery.

Sales increased 0.8 percent to $227 billion, the Commerce Department reported yesterday. Wholesale inventories fell 0.7 percent, a ninth straight decline that left stockpiles at a two-year low. The drop left the inventory-to-sales ratio, a gauge of how long goods sit in warehouses, at 1.26 months' worth, the lowest since May 1997.

"You can see by the strength in sales that the groundwork for a turnaround in inventories is being laid," said Robert Dederick, an economic consultant for Northern Trust Corp. in Chicago. "That's a positive for the economy."

February same-store sales at retailers including Wal-Mart Stores Inc. showed the biggest gain in nearly two years, making it difficult for businesses to keep their shelves stocked.

Gross domestic product, the value of all goods and services produced in the United States, probably rose at a 4.2 percent annual rate, according to a Bloomberg survey. By the second quarter, growth is expected to cool to a 3 percent annual rate.

The economy fell into recession in March 2000 and total stockpiles at U.S. businesses declined in almost every month of the year. Total inventories fell at a record $119.3 billion annual pace in the fourth quarter, while consumer spending grew at the fastest pace in 3 1/2 years.

February's level of wholesale inventories alone, at $285.1 billion, was the lowest since $284.3 billion in December of 1999, Commerce officials said.

Durable goods stockpiles at wholesalers dropped 0.9 percent in February, reflecting a decrease in inventories of imported automobiles. Sales of autos rose 1.6 percent in February, after a 17 percent rise in January.

The pace of auto sales picked up in February from a month earlier. Automakers sold 16.7 million vehicles at an annual pace, up from January's 15.8 million rate. Toyota Motor Corp.'s sales rose 1.7 percent from February of 2001. That gain reflected more demand for both Toyota brand and luxury Lexus division models.

Inventories of appliances and other electrical equipment declined 0.8 percent in February. Stockpiles of hardware, machinery, metals, lumber and professional equipment decreased in February, as well. Sales of all durable goods increased 0.8 percent in February after rising 1.3 percent.

Inventories of nondurable goods fell 0.3 percent after falling 0.2 percent in January. Stockpiles of groceries declined 0.4 percent in February. Paper and clothing also declined. Sales of nondurable goods rose 0.8 percent in February, reflecting increases in clothing, drugs, groceries and chemicals.

Wholesalers account for about one-fourth of all business stockpiles. Retailers and factories account for the rest. Last week, the Commerce Department reported a 0.4 percent decline in February factory inventories after a 0.8 percent drop a month earlier. The government will report on retail inventories Friday.

Sales at stores open at least a year rose 6.2 percent in February from a year earlier, the biggest monthly increase since April 2000, according to the Bank of Tokyo-Mitsubishi Ltd. Same-store sales, or sales at stores open at least a year, are an important retail indicator because they exclude results from new and closed locations.

U.S. stock prices were mixed yesterday. The Dow Jones industrial average fell 22.56 points to 10,249.08. The Nasdaq composite index rose 15.84 to 1,785.87.

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