WASHINGTON — Wholesalers’ inventories rose for a third consecutive month in March, while sales increased by more than double the expected amount. Rising demand is making businesses more confident, a key development needed to sustain the recovery.
Wholesale inventories rose 0.4 percent, lower than the 0.5 percent that had been expected, the Commerce Department said yesterday. Sales shot up 2.4 percent, more than double the 1.1 percent economists had forecast.
It marked the 12th straight month that sales have risen at the wholesale level. The hope is that businesses will step up ordering and restock depleted shelves, giving a boost to factories and prompting them to rehire laid-off workers.
Mike England, an economist with Action Economics, said the big sales gain among wholesalers reinforced earlier reports of March sales increases at the retail and manufacturing levels. The 0.4 percent rise in March inventories followed gains of 0.6 percent in February and 0.1 percent in January.
Inventories have risen for five of the past six months. A 0.5 percent increase in October was the first gain after 13 consecutive declines. Before October, businesses had gone through a massive liquidation of their stocks as they struggled to contain costs during the recession. Increased orders have helped make manufacturers the standout performers in the recovery so far.
The rise in inventories and even bigger jump in sales pushed the inventory to sales ratio down to 1.13 in March. That means it would take 1.13 months to deplete existing stocks at the March sales pace. The ratio had been at 1.16 in February and stood at 1.39 in March 2009.
The economy, as measured by the gross domestic product, grew at an annual rate of 5.6 percent in the final three months of 2009.