WASHINGTON (AP) — U.S. wholesale businesses increased their stockpiles in December at the slowest pace in 17 months, and sales were weak for a fifth month.
Wholesale stockpiles edged up a slight 0.1 percent in December, the smallest increase since a similar 0.1 percent rise in July 2013, the Commerce Department reported Tuesday. Inventories had been up 0.8 percent in November.
Sales at the wholesale level fell 0.4 percent in December, matching the drop in November. Sales have either fallen or stayed unchanged for five consecutive months.
The deceleration of stockpile growth in December could be a reaction to the sales slowdown, with businesses cutting back on restocking in the face of weaker demand. But economists remain optimistic that sales will rebound in 2015 and help push the economy forward.
That optimism stems from strong gains in employment, which should power consumer spending in the coming months.
Employers added 257,000 jobs in January after gains of 329,000 in December and 423,000 in November, the most robust three-month pace of hiring in 17 years. Wages also jumped in January. While the unemployment rate rose to 5.7 percent from 5.6 percent, the increase occurred for a good reason: More than 700,000 Americans, the most in six years, joined the workforce and began looking for jobs.
Economists believe that the strength in the labor market combined with lower gas prices will spur a surge in consumer spending. Businesses will then have to restock their shelves to keep up with demand.
Economic growth slowed to a growth rate of 2.6 percent in the October-December quarter after a 5 percent expansion in the previous quarter. Many economists, looking at the sizzling employment gains in recent months, expect growth to improve enough in the coming quarters to push activity above 3 percent for 2015 overall. That would be the best performance in a decade.
The small rise in stockpiles in December reflected gains in categories such as autos and furniture, which offset declines in stockpiles of lumber and electrical equipment.
Total inventories at the wholesale level edged up to $47.6 billion in December, 6.7 percent higher than a year ago.