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US business expanded stockpiles modestly in November despite lower sales

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WASHINGTON — U.S. businesses added to their stockpiles by a modest amount in November, even though sales were weak for a fourth consecutive month.

Businesses increased stockpiles by 0.2 percent in November, matching the increase in October, the Commerce Department reported Wednesday. Total business sales fell 0.2 percent in November following a 0.3 percent drop in October. A separate report Friday says that retail sales declined in December.

While businesses could start cutting back on their stockpiling if sales don't improve, economists remain optimistic. They are expecting a rebound in demand in coming months, given strong employment gains and a big drop in gas prices, which means people have more money to spend on other items.

PHOTO: FILE - In this Tuesday, Nov. 18, 2014, file photo, Towne East J.C. Penney employee Derreck Andrews stocks sweaters for Thanksgiving Day sales, in Wichita, Kan. The Commerce Department reports on business stockpiles in November on Wednesday, Jan. 14, 2015. (AP Photo/The Wichita Eagle, Mike Hutmacher, File)
FILE - In this Tuesday, Nov. 18, 2014, file photo, Towne East J.C. Penney employee Derreck Andrews stocks sweaters for Thanksgiving Day sales, in Wichita, Kan. The Commerce Department reports on business stockpiles in November on Wednesday, Jan. 14, 2015. (AP Photo/The Wichita Eagle, Mike Hutmacher, File)

Further increases in stockpiles to fill empty shelves would likely translate into increased factory production and stronger economic growth.

For November, stockpiles at the wholesale level rose by 0.8 percent, while manufacturing inventories were up a slight 0.1 percent. Retail inventories actually fell 0.1 percent.

A major reason for the bullish outlook on business sales is the improvement in the job market. The economy added nearly 3 million jobs in 2014, the strongest job growth since 1999. The hiring gains mean more people working and rising incomes that should boost consumer spending, which accounts for 70 percent of economic activity.

Many analysts believe the economy will grow by 3 percent in 2015, which would be the strongest annual gain in growth in a decade.

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