WASHINGTON (AP) -- The Commerce Department reports on how much U.S. businesses adjusted their stockpiles in December. The report will be released at 10 a.m. Eastern on Thursday.
STOCKPILES LIKELY GREW: Economists forecast that business stockpiles rose 0.4 percent in December, according to FactSet. That would match November's 0.4 percent gain. The report includes data on stockpiles held by wholesalers, manufacturers and retailers.
FUTURE RESTOCKING MAY SLOW: When companies boost their inventories, it generally adds to economic growth, because it requires more factory production. A big increase in stockpiles during the July-September quarter contributed two-fifths of that period's surprisingly robust 4.1 percent annual growth rate.
Greater stockpiling also suggests that businesses are more optimistic about the economy and expect consumers to buy more goods.
But rising stockpiles can also pose risks for economic growth. All those additional products in stores and on warehouse shelves will weigh heavily on the companies that own them if consumers don't spend more.
Spending at retail chains and restaurants rose 0.2 percent in December, following a solid 0.4 percent gain in November. December's figure was held back by a sharp drop in auto sales, which many economists blamed on extremely cold weather than month.
January's retail sales will also be reported Thursday. If sales slow, retailers, manufacturers and wholesalers will have to sell their goods at discounted prices, cutting into profits. And those companies will also order fewer new goods, lowering factory output.
So far, however, economists say that inventories don't appear to be outpacing sales. But they probably won't grow as fast in the first three months of this year as they did in the preceding three months. That's partly because companies already have so many goods on hand.
Slower restocking will likely lower growth to about a 2 percent annual pace in the first quarter, down from 3.2 percent in the October-December quarter.
- Professional Services