WASHINGTON (Reuters) – U.S. business inventories increased slightly in February amid strong sales growth likely as households stocked up on goods ahead of tariffs on imports.
Inventories rose 0.2% after climbing 0.3% in January, the Commerce Department’s Census Bureau said on Wednesday.
The rise in inventories, a key component of gross domestic product, was in line with economists’ expectations.
Inventories increased 2.1% year-on-year in February. Inventories are the most volatile component of GDP. Private inventories were almost depleted in the fourth quarter amid robust consumer spending, some of it fueled by pre-emptive buying ahead of duties on imports to avoid higher prices.
Uncertainty stoked by a rapidly changing trade policy likely severely curtailed economic growth in the first quarter.
Economists’ GDP growth estimates for the January-March quarter are mostly below a 0.5% annualized rate, with greater odds of a contraction. The economy grew at a 2.4% pace in the fourth quarter, with inventories a drag.
Retail inventories edged up 0.1% as estimated in an advance report published last month. They were unchanged in January. Motor vehicle inventories ticked up 0.1% rather than being unchanged as previously reported. They dropped 1.0% in January.
Retail inventories excluding autos, which go into the calculation of GDP, gained 0.1% as previously reported. They rose 0.5% in January.
Wholesale inventories increased 0.3% in February, while stocks at manufacturers climbed 0.1%.
Business sales rebounded 1.2% after declining 0.6% in January. At February’s sales pace, it would take 1.35 months for businesses to clear shelves, down from 1.36 months in January.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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