Inventories at the wholesale level rose 1.2 per cent in January compared with December when inventories had edged up a slight 0.1 per cent, the Commerce Department said Friday.
It was the biggest gain since a similar increase in December 2011.
Sales at the wholesale level dropped 0.8 per cent after being flat in December.
Sluggish growth in stockpiles was a key reason the economy barely grew in the October-December quarter. But economists believe stronger job growth and other signs of an economic rebound will spur businesses to restock this quarter.
Increased stockpiling supports economic growth by triggering greater factory production.
The economy, as measured by the gross domestic product, grew at a barely discernible 0.1 per cent rate in the fourth quarter. But many economists believe faster inventory building in the current quarter will help lift growth to a faster pace of around 2 per cent in the January-March period.
In January, the rise in stockpiles was led by a 3.4 per cent gain in lumber inventories, a sign that building supply stores are boosting stockpiles in response to the rebound in home construction that has been occurring.
Stockpiles of furniture, another industry that thrives when the housing market is gaining, rose 0.9 per cent in January.
Farm inventories, however, fell 1.5 per cent after an even larger 5.5 per cent drop in December. These declines likely reflected the impact of a severe drought last year which cut production.
The various changes left wholesale inventories at $504.4 billion on a seasonally adjusted basis, 6.5 per cent above the level of a year ago.
In another sign of a rebounding economy, the Labor Department reported Friday that a burst of hiring in February added 236,000 jobs and reduced the unemployment rate to 7.7 per cent, the lowest level in four years.
Another factor expected to boost growth this year is an improving trade performance with further gains in exports as the debt crisis in Europe stabilizes and growth in Asia rebounds.
However, the government reported Thursday that the U.S. trade deficit rose in January as export sales declines while imports of various goods including oil showed gains.
For the entire year, economists are still looking for an improvement in U.S. exports based on their forecasts that the global economy will be strengthening.Suggest a correction