Manufacturing and trade inventories in the U.S. increased in February by 0.5% on a seasonally-adjusted basis, according to the Commerce Department. This increase is small, but larger than January's 0.2% rise. The inventory-to-sales ratio, another important data point the report provides, remained flat at 1.27. Its value implies that economic expansion and hiring should follow as sales increase.
Here's a chart showing the inventory-to-sales ratio since 2001, provided by the report:
During the recession, inventories rose while sales declined. That created an imbalance resulting in layoffs. The height of the peak shows part of the reason why unemployment increased so much. At that time, firms ramped up firing to try to match the lackluster demand for goods. Since the start of 2010, however, it looks like the balance is finally getting back to around where it was from 2005-2007.
It's important to note that this is February's data -- it does not take into account the relatively strong retail sales data also released today from March. It showed retail sales rose by 1.8%. In February, retail sales only increased by 0.2%. This indicates that, unless manufacturers, retailers and wholesalers ramped up their inventories in that month more than sales increased, the ratio should have declined in March. The lower it goes the more need for additional workers to match the demand for products.