U.S. businesses increased their stockpiles in April by the largest amount in six months, signaling business optimism that future demand will keep rising.
Business inventories rose 0.6 percent after a 0.4 percent March gain, the Commerce Department reported Thursday. It marked the 11th consecutive increase in stockpiles, and was the biggest advance since October. Total business sales were up a solid 0.7 percent in April after a 1.1 percent rise in March, which had been the biggest monthly sales increase in 10 months.
The encouraging sales gains are expected to prompt businesses to keep ordering more goods to restock their shelves. That rising demand should help boost factory production and fuel the overall economy.
For April, inventories at the wholesale level climbed 1.1 percent, while inventories held by retailers rose 0.5 percent. Stockpiles at the manufacturing level were up 0.4 percent.
Economic growth went into reverse in the January-March quarter, with the economy contracting at an annual rate of 1 percent. However, much of that weakness reflected an unusually severe winter.
Economists are looking for growth to rebound to an annual rate of around 3 percent or better in the current April-March quarter and remain at a 3 percent level in the second half of this year.
Part of the optimism about growth reflects expectations that employers will keep increasing their hiring, with the extra jobs boosting incomes and supporting stronger consumer spending.
The economy added 217,000 jobs in May, the fourth straight month of a gain of more than 200,000, something that hasn’t happened since 1999. The unemployment rate remained unchanged in May at 6.3 percent, the lowest in more than five years.