Wholesale inventories jump 1.1% in a sign of weakness

WASHINGTON — U.S. wholesale inventories jumped a larger-than-expected 1.1% in December, according to data released Friday that suggested an unwanted buildup of goods that could weigh on economic growth.

The increase, which brought the value of wholesale inventories to $411.6 billion, followed an upwardly revised 0.8% rise in November, the Commerce Department said.

Economists were expecting inventories to move up just 0.3% in December.

The surprisingly large increase came as sales by wholesalers fell 0.7% to $376.6 billion in December, which followed a downwardly revised 1.9% November rise.

Economists said the sharp inventory buildup suggested that economic growth in the fourth quarter was stronger than the government had estimated last week but it implied weaker growth going forward as businesses tried to work off the excess.

“The biggest surprise is whether an inventory increase is voluntary or involuntary,” said Pierre Ellis, senior global economist for Decision Economics in New York. “Some of it looks like it’s involuntary, which is risky for the economy.”

In its first estimate of fourth-quarter growth released Jan. 30, the Commerce Department said businesses had begun liquidating inventories in the final three months of the year, shaving 1.25% off growth.

Inventories were boosted by a wide range of goods, including automobiles, lumber, metals, electrical supplies and nondurable goods, the department said.

Wholesale sales of durable goods, items intended to last three years or longer, fell 2% in December, the biggest drop since June 2001, when the economy was in recession.

The inventory-to-sales ratio, which measures how long it would take to sell off inventory at the current sales pace, moved up to 1.09 months’ worth from the record low 1.07 in November.