U.S. wholesale inventories edged up in April as sales also rose

U.S. wholesalers added slightly to stockpiles in April, while sales rose by the same amount, according to government data released Friday. For investors, the read points to a steady goods pipeline: companies had enough product on hand to meet demand, without a sign in the report that shelves were filling up faster than sales.

Wholesale inventories increased 0.1% in April, the government said. Sales for the month also climbed 0.1%.

Inventories are goods made for sale that have not yet found a buyer. The number matters because stockpiles can show how businesses are reading demand. When companies expect stronger sales, they often build inventory so they can fill orders. When inventories and sales move together, it suggests supply and demand are more closely matched.

The inventory-to-sales ratio, a measure of how many months it would take to sell current stockpiles at the current sales pace, stayed at 1.35 months, according to the government. A year earlier, the ratio was higher at 1.39 months.

That ratio gives the April figures their context. A 0.1% rise in inventories alone says businesses had slightly more unsold goods than in March. Matching 0.1% sales growth kept the ratio from rising, which means the stockpile did not grow relative to sales.

MarketWatch’s Jeffry Bartash reported that the current ratio signals businesses are making enough goods to keep up with demand while avoiding excess inventory. The lower ratio versus a year ago also shows businesses were carrying less inventory relative to sales than they were then, based on the government figures.

Wholesale inventories are one of the quieter economic indicators, but they feed into the broader picture of production, sales and demand. April’s report showed little movement in either direction: inventories and sales both increased by 0.1%, and the stockpile-to-sales measure held steady.

This story draws on original reporting from MarketWatch Market Pulse.