Businesses boost restocking 1 percent

By Martin Crutsinger
AP Economics Writer

WASHINGTON (AP) — U.S. companies increased their restocking in January from December, an encouraging signal that they expect consumers will spend more this year and help the economy grow faster.

The Commerce Department says business stockpiles grew 1 percent in January, up from 0.3 percent growth in December. Total business sales fell 0.3 percent in January after a slight 0.1 percent rise in December.

Weak growth in restocking was a key reason the economy barely grew from October through December. Since then, job growth has accelerated and wages have steadily risen. The combination could lead to greater consumer demand, prompting more business restocking and economic growth.

A separate report Wednesday showed that retail sales rose 1.1 percent in February, providing evidence that consumers are being helped by the stronger wage growth.

The economy grew only 0.1 percent rate in the fourth quarter. Still, sharp defense cuts and sluggish restocking, both volatile factors, were the main reason for the weak growth.

Economists say faster restocking in the current quarter should help lift growth to around 2 percent in the January-March period.

Employers added 236,000 jobs in February. That capped a four-month hiring spree in which the economy averaged 205,000 net jobs per month. And it pushed the unemployment rate to a four-year low of 7.7 percent, down from 7.9 percent in January.

Strong auto sales and a steady housing recovery are spurring more hiring, which could trigger more consumer spending and lead to stronger economic growth. Auto sales rose in January and February after reaching a five-year high in 2012.