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Business inventory increase a good sign

Amy Scott Dec 11, 2009
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Business inventory increase a good sign

Amy Scott Dec 11, 2009
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KAI RYSSDAL: There was a promising report out on retail sales this morning. The Commerce Department, the Census Bureau, specifically, told us that sales jumped a way better-than-expected 1.3 percent. Nice. Not really the whole story, though.

As economic indicators go, business inventories probably are not the most exciting thing you ever heard about. But that’s where we’re going today. Because after more than a year of cutting back, business owners have started restocking their shelves.

Our New York bureau chief Amy Scott explains why that bodes so well for the economy.


Amy Scott: We’re not talking any miracles here. Inventories grew by just two-tenths of a percent. But after 13 months of declines, economist Lakshman Achuthan says it’s a good sign.

Lakshman Achuthan: It’s a very good sign. Because when businesses ramp up inventories that’s, in essence, new orders going out across the country.

That means, eventually, factories start humming again, and businesses start hiring people to make and sell all that stuff. Achuthan predicts the economy will start creating jobs again in the next couple of months.

Louise Kasl isn’t there yet. She co-owns Kinetic Systems Bicycles in Clarkston, Mich. She says she’d love to buy more stock. Problem is she just doesn’t have the cash right now. She is optimistic about the spring and summer, though.

Louise Kasl: We just really have a good sense about next year continuing to be a strong year. So we’ve actually placed larger orders for next year.

Kasl says customers seem to have a better attitude about the economy lately. The numbers back her up. Not only did retail sales rise more than expected last month, Reuters and the University of Michigan say consumer sentiment is up too.

In New York, I’m Amy Scott for Marketplace.

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