Rising Business Inventories Signal Expected Strength Ahead

Cars on a lotBusiness inventories rose by 0.6% in the month of April. While this report from the Department of Commerce is reported with a one month lag, inventories are an indication that businesses are stocking up for a summer snap-back economy. Bloomberg and Dow Jones were both calling for a buildup of 0.4% in inventory growth.

Another win is that the 0.4% build in March inventories did not get revised from the initial 0.4% report. Also, the April report was the strongest build in six months.

Sectors leading the pack were electronics stores, wholesalers, furniture stores and car dealers. To put this perspective in dollar terms, the April gain of 0.6% was up to $1.337 trillion.

Business inventories measure the total dollar amount of inventories held by manufacturers, wholesalers and retailers. By tallying this up against sales, economists and investors get a picture of the near-term production and consumption, giving some insight into forward gross domestic product readings.

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Filed under: Economy
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