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US business inventories rise; sales flat

[WASHINGTON] US business inventories rose slightly more than expected in February as sales remained weak, a trend that could leave businesses with little appetite to accumulate more stock.

The Commerce Department said on Tuesday business inventories increased 0.3 per cent after being unchanged in January.

Economists polled by Reuters had forecast inventories rising 0.2 per cent in February.

Inventories are a key component of gross domestic product. Retail inventories excluding autos, which go into the calculation of GDP, increased 0.5 per cent in February. They rose 0.2 per cent in January.

The gain in inventories excluding autos could prompt economists to bump up their first-quarter GDP growth estimates, which are currently running below a 1.5 per cent annual pace. The economy grew at a 2.2 per cent pace in the fourth quarter.

Economic activity early this year was hurt by a harsh winter and a now-settled labor dispute at West Coast ports that disrupted the supply chain. A strong dollar and weak global demand also acted as a drag.

In February, business sales were unchanged after dropping 2.3 per cent in January.

At February's sales pace, it would take 1.36 months for businesses to clear shelves, unchanged from January.

That relatively high ratio suggests that inventories could be approaching levels that might make businesses a bit uncomfortable about adding more stock.