Retailers' inventories grow -- to accommodate brisk sales

Wholesalers also added to stocks in February

The economy

April 15, 1999|By BLOOMBERG NEWS

WASHINGTON -- Inventories of goods at U.S. businesses rose in February as retailers added stocks to keep up with increasingly strong sales, the Commerce Department reported yesterday.

Total inventories at retailers, factories and wholesalers rose 0.4 percent to $1.091 trillion after being unchanged in January, the report said. Total sales for those businesses rose 0.9 percent in February, after falling 0.2 percent in January.

The unexpectedly large gain in inventories was led by retailer stockpiles, which rose 0.7 percent for a third straight month. That came as retail sales surged 1.7 percent in February, the largest increase in five years.

"Retailers that had bet on continued strength were correct," said Lynn Reaser, chief economist at Bank of America Private Bank in Jacksonville, Fla. "There's always a question of whether it's voluntary or involuntary. In this case, it's intentional and it would appear to be justified."

Moreover, the inventory-sales ratio, which measures the amount of time goods sit on shelves, held at a record low 1.37 months.

"This means retailers will have to order more goods from manufacturers," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Inc. in New York.

Retailers are counting on continued sales gains to keep their rising inventories from becoming a drag.

Analysts expected business inventories to rise 0.2 percent in February after the previously reported rise of 0.1 percent in January. February's gain was the largest since November's 0.4 percent rise.

In the two other components of the inventory report, wholesale inventories rose 0.6 percent in February after falling 0.4 percent in January, and factory inventories were unchanged after falling 0.4 percent.

Pub Date: 4/15/99

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