Sector Snap: Construction materials companies rise

Construction materials companies climb after wholesale inventory report, jobless data

• By Mike Obel, AP Manufacturing Writer
• On 3:20 pm EDT, Thursday October 8, 2009

NEW YORK (AP) -- Shares of companies that make construction materials and building products rose Thursday after the government reported wholesale inventories slipped more than expected in August and jobless claims fell.

Wholesale inventories are goods, including consumer goods, held by distributors who generally buy from manufacturers and sell to retailers. The Commerce Department said Thursday that businesses reduced wholesale inventories 1.3 percent in August, worse than the 1 percent drop economists had expected. It was a record 12th consecutive monthly decline.

A decline in wholesale inventories raises the likelihood that any increase in demand for goods, like construction materials, will boost sales for providers.

Additionally, the Labor Department on Thursday reported the number of newly laid-off workers filing first-time claims for jobless benefits fell last week to the lowest level since early January.

Analysts said the August numbers constituted modestly good news.

"That total wholesale inventories were down 1.3 percent from the revised July level does not signal a dramatic drop," said Frost & Sullivan analyst Vivek Tapuriah.

"Yet this figure represents a decline in inventories of 14.7 percent from one year ago, which is perhaps good news for materials companies, who have been desperate for signs of life in a battered industry."

In afternoon trading, shares of Masco, which makes cabinets and bathroom figures, rose 50 cents, or 4 percent, to $13.-05. Gypsum wallboard maker USG Corp. increased 63 cents, or 3.8 percent, to $17.25. Birmingham, Ala.-based Vulcan Materials Co., which supplies cement and gravel, climbed $1.21, or 2.4 percent, to $52.44.

Buzz up!