WASHINGTON -- Sales by U.S. businesses posted their strongest increase in more than a year in December, and a survey of consumer attitudes suggested more strong growth in the months ahead, reports yesterday showed.
Sales of goods across the business spectrum -- from factories to wholesalers to retailers -- rose 1 percent in December, the Commerce Department said. That was up from the 0.6 percent rise in November and was the largest gain since a 1.1 percent increase in September 1997. Inventories of unsold goods, meanwhile, held steady as consumer spending left retailer's shelves lean and factory stockpiles became depleted.
The outlook is for more of the same, according to the University of Michigan's preliminary consumer sentiment index for February. The index rose to 107.4, the highest in 10 months, from January's 103.9, as Americans were more upbeat about economic conditions down the road.
"It gets back to jobs and wages, and both of those are increasing," said Raymond Worseck, chief economist of A. G. Edwards & Sons Inc. in St. Louis. The economy "looks pretty solid all the way around."
Even manufacturing, which staggered through last year because of weak export demand and low prices, seems to be holding its own. A survey of manufacturers in the Southeast United States showed factory managers expect production to pick up across the country. The Federal Reserve Bank of Atlanta's national production index rose to 10.3 last month from 5.0 in December.
A positive index means more of the region's manufacturers see factories around the nation increasing output in their industry.
Analysts are divided about how the data on inventories might figure into the government's revision for fourth-quarter 1998 gross domestic product. The government, in its initial report on fourth-quarter GDP, said inventories accumulated at a $48.9 billion pace, down from the third quarter's $55.7 billion.
The inventory-to-sales ratio, which measures the time goods sit at businesses, fell to 1.37 months, tying a record low set in July and September 1997.
Total business inventories were unchanged as declines in factory and chain-store stockpiles were offset by increases at auto dealers, building material suppliers and wholesalers.
Retail inventories, which account for about 30 percent of all business stockpiles, rose 0.7 percent in December while sales jumped 1 percent.
"Consumers are buying everything that isn't nailed down," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York.
Pub Date: 2/13/99