Economy

As Business Inventories Rise, America Is Back in Business

After a weather-related slowdown in the first two months of the year (and part of the third), it turns out the business inventories for the month of March are proving that America is back in business. Inventories rose by 0.4%, versus a Bloomberg consensus of 0.5%, but the prior month’s reading was revised to 0.5% from the 0.4% initially reported.

It turns out that businesses are running on lean inventories, but these inventories are rising to accommodate higher sales as well. If you don’t believe it, what does a 1.0% rise in sales signal? It feels like the snapback recovery, and perhaps that bodes well for the argument that first-quarter gross domestic product (GDP) gain of only 0.1% was an aberration rather than the new normal.

The inventory-to-sales ratio in March was effectively unchanged at 1.30. Wholesalers showed a slight dip in their inventory-to-sales ratio, but there was a 1.1% rise in inventory levels against a gain of 1.4% in sales. Another boost is the destocking trends in retail, which coincides with other readings we have seen for retail in April versus March.

Rising inventories can be a double-edged sword. Rising inventories due to poor sales is bad for the economy and for GDP. If inventories are rising because businesses have to build up for stronger demand, that is good for the economy.

Tuesday’s report signals that businesses are managing their business inventories well, and that the argument for a resumption of growth is looking better.

READ MORE: Small Business Optimism at Post-Recession High

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.