Wholesale sales gain is quickest since 1994 2.1% rise in February may bode faster growth as stocks are drawn down


WASHINGTON -- U.S. wholesale sales rose in February at the fastest rate in almost three years, suggesting growth may accelerate in the months ahead as companies place new orders to maintain inventories, government figures showed yesterday.

February's 2.1 percent increase in wholesale sales, up from a rise of 0.8 percent a month earlier, was the largest since August 1994, the Commerce Department said.

Inventories, meanwhile, held steady at a $260.1 billion annual rate during February after rising 0.8 percent in January.

The economy "is perking along at a pretty good pace," said Mark Vitner, an economist at First Union Corp. in Charlotte, N.C. "Inventories were already lean. We've seen that in the orders data. Everything is looking strong."

Also yesterday:

Growth in retail, service and manufacturing businesses picked up during March in the mid-Atlantic region, with little evidence of rising prices, the Federal Reserve Bank of Richmond, Va., said.

The monthly survey of businesses in Maryland, Virginia, West Virginia, the Carolinas and the District of Columbia reported that the index measuring shipments by manufacturers jumped to 29 points in March, from minus 10 points in February, the largest monthly increase in the history of the survey.

The survey also provided new evidence that inflation remains under control, at least in the surveyed states. Service sector prices rose at an annual pace of 0.40 percent, below the 0.70 percent increase in the previous month. Retail prices rose at an annual rate of 1.4 percent in March, a rise from the 1.1 percent rate in February.

A top Labor Department economist said U.S. consumer prices, excluding food and energy, may have crept higher in March.

The so-called core rate of the Consumer Price Index, which rose 0.2 percent in February, could be "marginally higher" because of the return of an airline ticket tax and rising apparel costs, said Patrick Jackman, the Labor Department economist responsible for the CPI. The report comes out April 15.

The overall CPI itself, which rose 0.3 percent in February, could be lower for March, reflecting the "potential that food and energy prices were better in March than in February," Jackman said.

Gasoline prices have fallen about 2 percent, he said, and the seasonal adjustment for March assumes higher energy prices.

Jackman, who based his comments on personal observations and not the actual statistics, said the rise in the CPI core rate would probably be temporary and "if you look at the longer term there's no danger" of accelerating inflation.

Low inflation is helping keep the economy on an even keel -- and "favorable" business and financial circumstances means "the economic expansion should continue" through this year, said Gary Stern, president of the Federal Reserve Bank of Minneapolis in a speech yesterday in Duluth, Minn.

Bond prices took another kick yesterday as the yield on the benchmark 30-year Treasury bond rose to 7.1 percent.

On Feb. 14, the yield was 6.5 percent. Stocks rose, with the Dow Jones industrial average up 53.25 points to close at 6609.16.

More jobs

The Commerce Department report showed inventories of professional equipment -- products such as fax machines, computers and other office supplies -- rose 2.7 percent in February on top of a sales gain of 0.7 percent for the month.

That could reflect the necessity for companies to furnish the offices of the employees they're hired in recent months. During the first three months of the year, the economy added 727,000 jobs.

In addition, "As we move toward the end of the business cycle and as labor cost pressures increase, we're seeing attempts by businesses to try to remain as competitive as possible," said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio. "We know that on the labor front they're losing the battle."

In another sign that demand was strong during February, the wholesale sales-to-stock ratio, which measures the time goods sit at wholesalers, dropped to 1.24 months, its lowest level in more than 12 years. In January, the ratio stood at 1.27 months.

The level of overall inventories -- which includes wholesale, retail and factory stocks -- is one of the last pieces left to complete the puzzle of first-quarter economic growth, analysts say.

The Commerce Department will report on total business inventories Tuesday.

Pub Date: 4/09/97

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad