US wholesale inventories revised higher in February

[WASHINGTON] US wholesale inventories increased more than initially thought in February, but inventory investment probably offered little or no boost to economic growth in the first quarter.

The Commerce Department said on Friday wholesale inventories rose 2.5 per cent in February, instead of 2.1 per cent as reported last month.

Stocks at wholesalers advanced 1.2 per cent in January. Economists polled by Reuters had expected inventories would be unrevised.

Wholesale inventories surged 19.9 per cent in February on a year-on-year basis. Inventories are a key part of gross domestic product. Wholesale motor vehicle inventories rebounded 1.4 per cent after declining 2.3 per cent in January.

Wholesale inventories, excluding autos, increased 2.6 per cent in February. This component goes into the calculation of GDP.

Inventory investment surged at a robust seasonally adjusted annualised rate of US$193.2 billion in the fourth quarter, contributing 5.32 percentage points to the quarter's 6.9 per cent growth pace. Most economists see further scope for inventories to rise, noting that inflation-adjusted inventories remain below their pre-pandemic level. Sales-to-inventory ratios are also low.

But inventories were probably not much of a boost to GDP growth in the January-March quarter as they would have needed to increase by more than the fourth quarter's pace.

Businesses are restocking after drawing down inventories from the first quarter of 2021 through the third quarter. Growth estimates for the first quarter are mostly below a 1.0 per cent rate.

Sales at wholesalers increased 1.7 per cent in February after jumping 5.0 per cent in January. At February's sales pace it would take wholesalers 1.21 months to clear shelves, up from 1.20 months in January. REUTERS