Productivity Rises in 1Q; Wholesale Inventories Unchanged
Trucking is sensitive to economic fluctuations and will benefit from an upturn in economic activity.
The increase in productivity, or the amount of output per hour of work, was the strongest in nearly 19 years and followed a 5.5% rate of increase in the fourth quarter of 2001, the Labor Department said.
Analysts were expecting a 7% growth rate, the Associated Press reported.
Increased productivity allows businesses to lower prices without cutting into profits, allowing companies to use discounts to reduce inventories. Dwindling inventories lead to more orders from factories and increased business for trucking firms.
The gain in the first quarter was due in part to businesses cutting back on payrolls. Total number of hours worked fell at a rate of 1.9%, Labor said.
Meanwhile, the Commerce Department reported an increase in stockpiles of petroleum products, offsetting declines in motor vehicles, furniture and machinery inventories.
Overall, wholesale inventories were valued at $284.4 billion, which follows a revised 0.9% decline in February. This was the first time in 10 months inventories did not decline. Analysts predicted that inventories would decline 0.4%, Bloomberg said.
Sales fell 0.1%, the first dip since December, to $224.6 million. Wholesalers account for about 25% of business inventories. Durable goods stockpiles fell 0.5% in March, and sales dropped 1%, Commerce said.
Analysts told Bloomberg that inventories will likely have to be rebuilt satisfy demand in the months ahead. This would increase the demand for trucking services.
The inventory-to-sales ratio, a measure of the time goods site unsold in warehouses, remained at 1.27 months. That is still the lowest since May 1997.
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