Manufacturers benefit as inventories rise more than forecast in December

on Thursday, February 10, 2011

Manufacturers benefit as inventories rise more than forecast in DecemberA report issued Thursday by the Commerce Department states that inventories at U.S. wholesalers climbed in December, beating previous estimates.

The one percent increase in stockpiles beat the median forecast of economists polled by Bloomberg that called for a 0.7 percent uptick. The rise in business inventories is a positive sign for the economy as it shows distributors endeavored to keep up with rising demand and improving sales; sales also increased to the highest level since August 2008, rising 0.4 percent to $371.5 billion

The increase in demand is a sign that orders to factories could keep going up in the coming months. Manufacturers stand to benefit from the higher demand and will need to work to replenish stockpiles, driving growth and potentially leading to more hiring in the sector.

Sal Guatieri, a senior economist at BMO Capital Markets, told Bloomberg the news is a boon for manufacturers and businesses alike. "Demand is coming back and companies are seeing the need to keep their shelves well stocked," he affirmed. "Manufacturers are cranking up production to keep up with growing strength in exports and growing domestic demand." 

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