U.S. Markets

U.S. business inventories up; sales gain largest since 2011

WASHINGTON - U.S. business inventories rose in December and sales recorded their biggest increase since 2011, suggesting that inventory investment would again contribute to economic growth in the first quarter amid strengthening domestic demand.

The Commerce Department said on Wednesday business inventories increased 0.4 percent. That followed an upwardly revised 0.8 percent jump in November.

Inventories were previously reported to have advanced 0.7 percent in November.

Inventories are a key component of gross domestic product.

Retail inventories edged up 0.1 percent in December instead of being flat as reported in an advance report published last month.

Retail inventories surged 0.9 percent in November.

Retail inventories excluding autos, which go into the calculation of GDP, rose 0.4 percent instead of the previously reported 0.2 percent increase. That followed a 0.5 percent rise in November.

Inventory investment contributed one percentage point to the economy’s 1.9 percent annualized growth rate in the fourth quarter. That was the second straight quarterly contribution to GDP growth.

Inventories had been a drag on GDP growth since the second quarter of 2015.

Business sales advanced 2.0 percent in December. That was the biggest increase since March 2011 and followed a 0.3 percent increase in November.

At December’s sales pace, it would take 1.35 months for businesses to clear shelves, down from 1.38 months in November.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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