Business »

US Business Inventories Rise 0.4 percent in February

Finances
Share on StockTwits
Published on
www.finances.com
US Business Inventories Rise 0.4 percent in February

US business inventories rose steadily in February, adding further to the view economic growth was subdued in the first quarter.

Business inventories rose 0.4 percent in February, following a similar gain at the start of the year, the Commerce Department reported today in Washington. A broad consensus of market analysts forecast a gain of 0.5 percent.

Retail inventories excluding automobiles rose 0.2 percent, following a gain of 0.6 percent in January. Motor vehicle inventories fell for the second straight month, official data showed.

Inventories, which are a key component of gross domestic product, suggest manufacturers are still working their way through current stocks of unsold goods. An advance estimate last week showed wholesale inventories increased for the eighth consecutive month in February at a pace of 0.5 percent.

Retailers, manufacturers and wholesalers restock their shelves to ensure they can meet ongoing demand. February’s slower than forecast pace suggests business expectations remained steady. Economists forecast faster restocking in the months ahead as manufacturers scale up to meet pent-up demand. This will translate into higher factory orders and rising production, which will spur growth in the second quarter.

The US economy, which expanded 2.6 percent between October and December, probably suffered a major setback in the first quarter of 2014. Some estimates peg US GDP growth at 1 percent in Q1. Others say adverse weather shaved 1 percentage point from first quarter growth. According to the International Monetary Fund, the US economy is on pace to grow 2.8 percent this year and 3 percent in 2015.

Share on StockTwits