Tags: Business | Inventories | economy | growth

Business Inventories Rise Less Than Expected

Friday, 12 April 2013 10:17 AM

U.S. companies restocked their shelves at a much slower pace in February than January, a sign they expected consumer and business spending to weaken.

Business stockpiles increased only 0.1 percent in February, the Commerce Department said Friday. That's the smallest gain since June and down from a 0.9 percent increase in January, which was revised slightly lower.

Total business sales rose at a healthy 1.2 percent pace in February, mostly because retail sales grew. But a separate report Friday showed retail sales fell 0.4 percent in March.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

Restocking helps drive economic growth. When companies order more goods, factory output increases. Economists had expected a bigger gain in stockpiles in February, so the lackluster increase could lead some to pare back their economic growth forecasts for the January-March quarter.

Prior to the February report, many had been predicting growth accelerated in the first quarter to an annual rate of roughly 3 percent. Even slightly slower growth would be better than the expansion rate of just 0.4 percent rate in the October-December quarter. Growth was held back in the fourth quarter by weaker restocking and steep cuts in defense spending.

Economists expect consumer spending rose from January through March, helped by strong gains in February. But the weaker retail spending in March signals growth may slow in the April-June quarter.

Job growth is also a question. Businesses stepped up hiring over the winter, adding an average of 220,000 jobs from November through February. But employers added just 88,000 net jobs in March, which likely weighed on spending last month, too.

Friday's report covers a broader range of companies than the wholesale report. It measures stockpiles held by manufacturers, wholesalers and retailers.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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U.S. business inventories rose less than expected in February, suggesting restocking of warehouses could give a smaller boost to economic growth in the first quarter than analysts had forecast.
Friday, 12 April 2013 10:17 AM
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