US wholesale inventories rise less than expected in February

[WASHINGTON] US wholesale inventories increased less than expected in February as sales rose for a second straight month.

The Commerce Department said on Wednesday wholesale inventories climbed 0.2 per cent to a record US$668.9 billion.

Data for January was revised down to show wholesale inventories advancing 1.2 per cent instead of 1.4 per cent as previously reported. Wholesale inventories increased 6.9 per cent on a year-on-year basis in February.

Economists polled by Reuters had forecast inventories at wholesalers rising 0.5 per cent in February. The component of wholesale inventories that goes into the calculation of gross domestic product gained 0.2 per cent in February.

Despite February's modest rise, inventory accumulation is expected to contribute to GDP growth in the first quarter. Growth estimates for the January-March quarter are in a 1.5 per cent to 2.3 per cent annualized range.

The economy grew at a 2.2 per cent rate in the fourth quarter, stepping down from the July-September period's brisk 3.4 per cent pace. The inventory build, however, will likely weigh on GDP in the second quarter as businesses place fewer orders with manufacturers while disposing the unwanted goods.

In February, wholesale auto inventories edged up 0.1 per cent after surging 1.5 per cent in the prior month. The auto sector has experienced an inventory overhang because of weak sales.

Wholesale apparel inventories jumped 1.8 per cent.

Sales at wholesalers increased 0.3 per cent in February after climbing 0.5 per cent in January. There were increases in sales of motor vehicles, furniture, professional equipment and electrical goods. But sales of wholesale groceries dropped 2.1 per cent, the most since April 2004.

At February's sales pace it would take wholesalers 1.35 months to clear shelves, unchanged from January.

REUTERS