Businesses boost inventories as sales slow
American businesses restocked their shelves and warehouses at a faster pace in December, but sales slowed — a cautionary sign for the economy.
The Commerce Department said Thursday that inventories rose 0.5 percent after a 0.4 percent increase in November. Sales growth fell to just 0.1 percent, from 0.7 percent in November.
The figures point to a risk for the economy: If companies build their stockpiles at a faster pace than their sales are growing, they may end up stuck with more goods than they need.
That would force them to cut prices sharply to clear the extra inventory. Businesses would likely order fewer goods, weighing on factory production.
Retailers' stockpiles rose 0.6 percent, while their sales were flat in December, the report said. Manufacturers and wholesalers increased their inventories by a smaller amount. Manufacturers' sales fell, while wholesalers' sales rose at a slower pace than in November.
A separate report Thursday showed that retail sales fell 0.4 percent in January as extremely cold weather kept shoppers at home. Auto sales fell sharply.