Another report showed that consumers cut back their borrowing in August by the most in 16 months. The drop suggested that many worried about taking on new debt while the economy slumped and the stock market fluctuated wildly.
The combination of rising sales and inventories should be a good sign for future factory output.
The Commerce Department said Friday that wholesale inventories rose 0.4 percent in August after a 0.8 percent July gain. Sales were up 1 percent, the best showing since a 3 percent rise in March.
The stronger sales gain was an encouraging sign after a slowdown that had raised concerns about whether the economy could be in danger of toppling into a recession. Economists expect overall economic growth to post a modest rebound in the second half of this year.
The August inventory gain pushed stockpiles to a seasonally adjusted level of $464.3 billion, up 21 percent from a September 2009 low of $383.6 billion. Companies were slashing inventories during the recession as they tried to control costs in the face of falling demand. The change to rebuilding inventories has been a major factor supporting growth over the last two years.
The economy slowed significantly in the first six months of this year as consumers, feeling the pinch of soaring gas prices, cut back on spending on other items. The overall economy grew at an anemic rate of just 0.9 percent from January through March, the weakest performance since the recession ended in June 2009.
Economists expect growth will show a slight improvement to about 2 percent in the last half of this year, still too weak to make a significant improvement in the unemployment rate.
The government reported Friday that the unemployment rate in September remained stuck at 9.1 percent for a third consecutive month.
Meanwhile, fewer Americans used their credit cards and a measure of auto and student loan demand fell.
Total borrowing dropped by $9.5 billion in August, the Federal Reserve said Friday. That follows an increase of $11.9 billion in July.
Consumer borrowing had risen for 10 consecutive months before the August decline, which was the largest drop since April 2010
Borrowing for auto and student loans plunged $7.2 billion in August. A category that includes credit cards tumbled $2.3 billion.
The overall decline lowered total borrowing to a seasonally adjusted $2.44 trillion. Borrowing is just 2.1 percent higher than the recent low hit in September 2010.
Americans have been struggling with high unemployment, meager pay raises and a big increase in gasoline prices in the spring. That has depressed consumer spending, which fuels 70 percent of economic growth.
Economists expect modest growth of 2 percent in the second half of the year. Households began borrowing less and saving more when the country fell into recession and unemployment surged.
While economists say they think that borrowing will gradually increase in coming months, they do not expect consumers to load up on debt the way they did during the housing boom. Americans felt wealthier then and were more willing to take on added debt because of the soaring value of their homes.
The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards.
Article source: http://feeds.nytimes.com/click.phdo?i=52f65d2a08dadf8c7e41216fd6d5020b
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