Consumer Delinquency Rate Drops : Credit: Analysts say improved finances set stage for greater spending. Meanwhile, inventories are up 0.1% in April.

The delinquency rate on consumer loans fell during the first quarter to the lowest level in nearly four years, improving prospects for retail spending later this year, a trade group said Monday.

A seasonally adjusted 2.31% of consumer loans were 30 days or more past due at the end of March, down from 2.43% three months earlier, the American Bankers Assn. said.

“This is another break in the clouds suggesting fairer weather in the coming months for the economy,” said James Chessen, chief economist of the association.

“Consumers’ financial positions continue to improve, and this should help promote greater spending in the second half of the year,” he said.

A year earlier, the delinquency rate stood at 2.75%. The latest rate, a composite for eight types of installment loans, was the lowest since 2.30% at the end of June, 1989.

“There’s been a conscious effort by individuals to put their finances in better shape,” said economist Robert G. Dederick of Northern Trust Co. in Chicago. “With the recovery (and lower interest rates), they’ve been in a position to do that.”

On another front, business inventories edged up 0.1% in April, the seventh consecutive advance, the Commerce Department said Monday. Sales dipped 0.2% for the second month in a row.

Continued growth in inventories at the same time sales were falling could mean cuts in production as businesses curb their orders pending an increase in demand.

Inventories held on shelves and back lots totaled a seasonally adjusted $860.4 billion, up from $859.5 billion a month earlier, the Commerce Department said.

The 0.1% increase in stocks was the smallest since a similar gain in October. And the 0.6% advance in March was revised down from the 0.8% originally estimated.

The report said sales totaled a seasonally adjusted $582.6 billion, down from $584 billion in March. March’s 0.2% decline was a revision from the 0.2% advance in the original report.

The difference in inventories and sales resulted in an inventory-to-sales ratio of 1.48, meaning it would take 1.48 months to exhaust inventories at the March sales pace.

That was the highest ratio since it stood at 1.49 in November. It had remained at 1.46 for three months before rising to 1.47 in March.

The biggest pileup of goods was at the retail level, where inventories rose 0.3% in April. Stocks grew 0.1% on the manufacturing level but inched down 0.1% on the wholesale level.

Retail sales, on the other hand, jumped 1.5% in April. Manufacturers’ sales also fell by 1.5%, while wholesale activity was unchanged. The Commerce Department reported Friday that retail sales in May slowed to a 0.1% gain.

Meanwhile, the delinquency rate on consumer loans varied from lows of 0.61% in Florida, 1.04% in Arizona and 1.16% in Wisconsin to highs of 6.21% in Puerto Rico, 4.68% in Connecticut and 4.28% in New York.

The report also said the delinquency rate for bank credit cards--which are not included in the composite rate--dropped from 2.93% at the end of December to 2.74% at the end of March. The rate on open-ended home equity lines of credit fell to 0.70% at the end of March from 0.85% at year-end.