WASHINGTON - U.S. wholesale businesses increased their stockpiles in March by the largest amount in five months while sales increased at the fastest clip in 10 months.
Wholesale stockpiles rose 1.1 per cent in March after a 0.7 per cent gain in February, the Commerce Department reported Friday. It was the ninth consecutive monthly gain and the largest increase since a 1.2 per cent rise in October.
Sales at the wholesale level were up 1.4 per cent, the best showing since a 1.9 per cent rise in May 2013.
The sizable gain in sales should encourage businesses to keep restocking their shelves to meet rising demand. That will mean increased orders to factories and rising production which would boost economic growth.
In the January-March quarter, the economy slowed to a barely discernible growth rate of 0.1 per cent after growth of 2.6 per cent in the October-December quarter. A slowdown in inventory building subtracted 0.6 percentage point from first quarter growth.
But economists expect the drag from a slowdown in inventory building will ease in the second quarter. The big rise in March inventories supports that view, indicating that there was growing momentum headed in the second quarter.
Many analysts are looking for growth to easily top 3 per cent in the second quarter with the most optimistic saying the economy may surge to growth above 4 per cent, reflecting pent-up demand from consumer spending that was delayed during the harsh winter.
Analysts think that growth will hold above 3 per cent in the second half of this year. If that forecast proves accurate, it would mean the country will enjoy the strongest year for the economy since 2005, two years before the Great Recession hit.