Wholesale businesses increased their stockpiles of autos, computer equipment and heavy machinery in August, boosting inventories for a 20th straight month as their sales rose at the fastest pace in five months.
The combination of rising sales and inventories should be a good sign for future factory output.
The Commerce Department said Friday that wholesale inventories rose 0.4 percent in August after a 0.8 percent July gain. Sales were up 1 percent, the best showing since a 3 percent rise in March.
The stronger sales gain was an encouraging sign after a slowdown that had raised concerns about whether the economy could be in danger of toppling into a recession. Economists expect overall economic growth to post a modest rebound in the second half of this year.
The August inventory gain pushed stockpiles to a seasonally adjusted level of $464.3 billion, up 21 percent from a September 2009 low of $383.6 billion. Companies were slashing inventories during the recession as they tried to control of costs in the face of falling demand. The change to rebuilding inventories has been a major factor supporting growth over the past two years.
The economy slowed significantly in the first six months of this year as consumers, feeling the pinch of soaring gas prices, cut back on spending on other items. The overall economy grew at an anemic rate of just 0.9 percent from January through March, the weakest performance since the recession ended in June 2009.
Economists expect growth will show a slight improvement to around 2 percent in the last half of this year, still too weak to make a significant improvement in the unemployment rate.
The government reported Friday that the unemployment rate in September remained stuck at 9.1 percent for a third straight month.