WASHINGTON – U.S. wholesale businesses increased their stockpiles in December at the slowest pace since last summer, another sign that the economy lost some momentum at the end of 2013.
Wholesalers boosted stockpiles by 0.3 per cent in December from November, smallest gain since July, the Commerce Department reported Tuesday.
Sales growth slowed to 0.5 per cent December after healthy gains of 1 per cent in November and 1.1 per cent in October.
Rising stockpiles boost economic growth because they reflect expanding production at factories. Bigger inventories accounted for more than 40 per cent of economic growth in the July through September period last year when gross domestic product increased at a robust 4.1 per cent annual pace.
The surge in stockpiles slowed in the last three months of 2013, and overall growth fell back to a still-healthy 3.2 per cent.
After the December increase, inventories at the wholesale level stood at a seasonally adjusted $517.9 billion, up 4 per cent from a year earlier.
The government tracks inventories held by wholesalers, manufacturers and retailers. A report covering all inventory levels comes out Thursday.
At the wholesale level, inventories of computer equipment rose by 5.3 per cent after a healthy 3.6 per cent gain in November. Automotive stockpiles rose 0.6 per cent after dropping in November. Overall, inventories of long-lasting durable goods rose 1.3 per cent in December. But non-durable goods stockpiles fell 1.3 per cent, pulled down by a 5.2 per cent drop in inventories of farm products.
Economists had hoped 2014 would be a breakout year for the U.S. economy, still struggling to regain full strength nearly five years after the Great Recession ended. But recent economic reports have sent out conflicting signals.
Consumer spending, which drives 70 per cent of U.S. economic activity, rose at a solid pace in December. Consumer confidence has also been healthy. Unemployment has fallen to a five-year low 6.6 per cent.
But two straight months of weak job growth have raised questions about the economy’s strength. Employers added a disappointing 113,000 jobs in January and just 75,000 in December. And part of the drop in unemployment — from 7.2 per cent in October — has been caused by Americans dropping out of the job market, which means they can no longer be counted among the jobless.