Companies restock shelves, expecting sales

Companies restocked at a faster pace in December, a positive sign that they expect consumers to step up spending.

The Commerce Department said Tuesday that inventories climbed to $1.56 trillion in December, an increase of 0.4 percent that reinforces the view that fourth-quarter economic growth received a big boost from companies restocking.

Economists polled by Reuters had forecast inventories increasing 0.5 percent in December. Sales rose 0.3 percent in November, the government said.

Companies are building up their stockpiles again after cutting them over the summer amid recession fears. Higher inventories require more production, which boosts economic growth. It also suggests companies expect more sales.

Inventories are a key element for measuring changes in gross domestic product.

A report on January 27 showed growth in business inventories helped drive a 2.8 percent expansion in gross domestic product during the fourth quarter.

Tuesday's report showed manufacturing stocks rose 0.1 percent in December, while retailers gained 0.2 percent and wholesalers' stocks edged 1.0 percent higher.

Business sales advanced 0.7 percent to $1.23 trillion.

The inventory-to-sales ratio, which measures how long it would take to clear shelves at the current sales pace, fell to 1.26 months from 1.27 months in November.

Reuters and The Associated Press contributed to this report.