US business inventories rise moderately in February

US business inventories rose moderately in February, suggesting that inventory investment could subtract from economic growth in the first quarter.

Business inventories increased 0.2 per cent after falling 0.2 per cent in January, the Commerce Department said on Friday (Apr 14). Economists polled by Reuters had expected inventories, a key component of gross domestic product (GDP), to rise 0.3 per cent.

Inventories increased 9.1 per cent on a year-on-year basis in February. Inventory accumulation surged in the fourth quarter, mostly reflecting an unwanted piling up of goods, as growth in consumer spending decelerated because of higher interest rates.

Retail inventories increased 0.7 per cent instead of 0.8 per cent as estimated in an advance report published last month. They were unchanged in January.

Motor vehicle inventories accelerated 1.6 per cent instead of 1.9 per cent as estimated last month. They rose 0.4 per cent in January. Retail inventories excluding autos, which go into the calculation of GDP, gained 0.3 per cent instead of 0.4 per cent as estimated last month.

Inventories accounted for about half of the 2.6 per cent annualised growth rate in GDP in the fourth quarter.

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Wholesale inventories rose 0.1 per cent in February. Stocks at manufacturers fell 0.1 per cent.

Business sales were unchanged in February after rebounding 1.2 per cent in January. At February’s sales pace, it would take 1.36 months for businesses to clear shelves, unchanged from January. REUTERS