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Business inventories and sales rise in January

WASHINGTON (AP) — Businesses added to their stockpiles in January for a 13th consecutive month and total sales rose by the largest amount in 10 months.

Business inventories rose 0.9 percent in January, the Commerce Department said Friday. Sales for all businesses at the manufacturing, wholesale and retail level increased 2 percent, the seventh consecutive gain and the largest since March. Healthy gains in sales and inventory restocking should translate into strong orders for U.S. factories.

The string of increases in inventories pushed stockpiles to $1.45 trillion in January. That’s a level that economists consider to be healthy for this stage of the recovery. It’s 10.1 percent higher than the recent low of $1.32 trillion reached in September 2009.

Manufacturing has helped to lead the economic recovery. Economists expect that will continue as long as businesses are seeing strong demand. A separate report Friday said sales at the retail level posted a solid 1 percent gain in February.

In January sales were up at all levels of business, led by a 3.4 percent jump in demand at the wholesale level.

The rise in inventories in January followed a 1.1 percent increase in December. Manufacturers boosted their stocks by 1.3 percent while wholesale inventories rose 1.1 percent and retailers increased their stockpiles 0.4 percent.

The big gain in sales pushed the ratio of inventories to sales down to 1.23, matching the record low set last April. That means it would take only 1.23 months to exhaust inventories at the January sales pace.

The lean level of inventories in relation to sales is another good sign that factory production should be headed higher in coming months.