Wholesale inventories rose 0.4% in March, slightly lower than the 0.5% gain expected, the Commerce Department said Tuesday. Sales shot up 2.4%, more than double the 1.1% increase economists had forecast.
It marked the 12th month that sales have risen at the wholesale level, an encouraging sign for the economic rebound. The hope is that businesses will step up ordering and restock depleted shelves, giving a boost to factories and prompting them to rehire laid-off workers.
The 0.4% rise in March inventories followed gains of 0.6% in February and 0.1% in January.
Inventories have risen five of the past six months. A 0.5% increase in October was the first gain after 13 consecutive declines. Before October, businesses had gone through a massive liquidation of their stocks as they struggled to contain costs during the recession.
The move away from slashing inventories has played an important role in supporting growth the past two quarters. Increased orders have helped make manufacturers the standout performers in the recovery so far.
The rise in inventories and even bigger jump in sales pushed the inventory- to-sales ratio down to 1.13 in March. That means it would take 1.13 months to deplete existing stocks at the March sales pace. The ratio had been at 1.16 in February and 1.39 in March 2009.
The overall economy, measured by gross domestic product, grew at an annual rate of 5.6% in the final three months of last year. About two-thirds of that growth came as companies slowed the reduction of their inventories.
The Labor Department said Tuesday that employers hired 4.24 million people in March, up from 4 million the previous month. Job openings edged up 47,000 to 2.69 million.
That is particularly true for small businesses. A separate survey by the National Federation of Independent Business found smaller companies were more optimistic in April about future economic trends than the previous month. But slightly more are still planning to cut jobs than create them, the NFIB said.
The group's small business optimism index rose to 90.6 from 86.8, the highest since September 2008, when Lehman Brothers collapsed and the financial crisis intensified. It was the first time in 18 months that the index topped 90. But the index rarely falls that low, and was below 90 for only one quarter in the steep 1980-82 recession.
"The level of the index is still very depressed," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note to clients. "If the whole economy were small businesses, this survey suggests it would still be contracting at a 3% rate."
Economists generally cite two reasons for the divide: Small companies are less likely to export than larger firms and therefore aren't benefiting as much from improving economies in Asia and parts of Latin America.
Smaller companies are also more dependent on bank lending than larger firms, which can issue bonds in order to borrow.
In the government's report, the construction and retail industries reported the largest jumps in hiring, while manufacturing and government also reported gains. The increase in construction hiring is likely a rebound from February, when severe weather shut down many projects.
The report, known as the Job Openings and Labor Turnover survey, illustrates the rapid churn that takes place in the job market, even when hiring is fairly weak. In addition to the 4.24 million hires that took place in March, about 4 million people were laid off, fired or quit their jobs.
Last week, the Labor Department said employers added a net 290,000 jobs in April — the most in four years — as confidence in the economic recovery increases. But the unemployment rate rose to 9.9%, as the new jobs weren't enough for the more than 800,000 people that resumed job searches.
With nearly 15.3 million people unemployed, competition for jobs remains stiff. In March, there were nearly 5.6 jobless workers, on average, for each opening. That compares to 1.7 jobless workers for every opening in December 2007, when the recession began.
Dyke Messinger, president of Power Curbers, a Salisbury, N.C., company that makes road construction equipment, said his U.S. business was closely tied to the housing industry, which is still struggling.
His company, which has around 130 workers, isn't hiring. He doesn't think that will change any time soon — even though he expects his international business to improve in the current quarter.
"While there are certainly some good signs for companies in other sectors of the economy, we're expecting a slow U.S. recovery this year," Messinger said.