UPDATE 1-U.S. commercial paper supply grows to largest in five months

Thu Jun 12, 2014 10:37am EDT

(Adds background on latest data)

NEW YORK, June 12 (Reuters) - The amount of U.S. commercial paper outstanding grew to its highest in more than five months in the latest week, signaling increasing demand for private loans to finance inventories and payrolls, Federal Reserve data showed on Thursday.

U.S. seasonally adjusted commercial paper outstanding rose for a second week, up $7.6 billion to $1.046 trillion in the week ended June 11.

This reading on short-term company borrowing has risen $56 billion since early February as the economy recovers from a harsh winter.

The government said on Thursday business inventories grew 0.6 percent in April following a 0.4 percent rise in March.

Last week, official data showed U.S. employers added 217,000 workers in May after a 282,000 increase in April.

On the other hand, non-seasonally adjusted commercial paper outstanding, which some analysts consider a more reliable reading than the seasonally adjusted one, a measure which was distorted by the financial crisis, fell $4.2 billion to $1.100 trillion. This figure was roughly $23 billion below a near three-year peak set in May, Fed data showed.

Interest rates on one-month commercial paper rose this week.

For example, top-rated nonfinancial companies on average sold these one-month IOUs at a 0.07 percent rate on Wednesday, compared with 0.05 percent last week, according to the Fed.

Banks and other financial firms sold one-month commercial paper at an average interest rate of 0.09 percent, compared with 0.05 percent a week earlier. (Reporting by Richard Leong; Editing by James Dalgleish)

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