Businesses slow restocking inventories

U.S. companies restocked store shelves and warehouses at U.S. companies restocked store shelves and warehouses at a slower pace in December, a sign of caution as sales weakened. The repercussions are felt from supply to delivery. These FedEx workers sort packages in Oakland, Calif. (Dec. 11, 2012) Photo Credit: AP

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WASHINGTON -- U.S. companies restocked store shelves and warehouses at a slower pace in December, a sign of caution as sales weakened. Slower restocking was a major drag on the economy in the final three months of last year.

Business inventories ticked up 0.1 percent in December from November, the Commerce Department said Wednesday. That was below the 0.2 percent pace the previous month and the smallest increase since last June.

Total sales for wholesalers, retailers and manufacturers increased only 0.3 percent, down from a 0.9 percent clip in November.

Slower rebuilding of inventories means factories produced less, lowering overall economic output.

One silver lining: If sales keep growing, companies may have to restock more quickly in the January-March quarter, boosting growth. A separate report Wednesday showed retail spending ticked up in January.

The slower inventory rebuild in the final three months of last year than in the previous three months was a big reason the government estimated the economy actually shrank at an annual rate of 0.1 percent in the October-December quarter. That was the first contraction in 3½ years.

A report last week showed that businesses at the wholesale level cut inventories by 0.1 percent in December, after boosting them in November.

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