WASHINGTON (Reuters) - Business inventories rose more than expected in January as auto dealers rebuilt stocks at the fastest pace since July 2010 to meet pent-up demand from households.
The Commerce Department said on Tuesday inventories increased 0.7 percent to a record $1.57 trillion, after advancing by an upwardly revised 0.6 percent in December.
Economists polled by Reuters had forecast inventories rising 0.5 percent in January after a previously reported 0.4 percent increase the prior month.
The rise in inventories in January reflected a 2.6 percent jump in restocking by auto dealers to meet increased demand for motor vehicles from consumers, whose confidence in the economy has been lifted by a strengthening labor market. Auto inventories had increased 0.6 percent in December.
Inventories are a key component of gross domestic product changes. Restocking by businesses helped to lift fourth-quarter GDP to a 3 percent annual rate, and economists expect the pace of accumulation to slow down this quarter and hold back growth.
Business sales increased 0.4 percent to a record $1.24 trillion in January, after rising 0.9 percent the prior month.
At January’s sales pace it will take 1.27 months for businesses to clear shelves, unchanged from December.
Reporting by Lucia Mutikani; Editing by Andrea Ricci