Business inventories rise for 10th month in a row

February's snowstorms pushed retail sales lower

April 15, 2003|By BLOOMBERG NEWS

WASHINGTON - U.S. business inventories rose for a 10th straight month in February as snowstorms led to a decline in retail sales, a government report says. Total business sales fell the most in 15 months.

A 0.6 percent increase in stockpiles to $1.6 trillion followed a 0.3 percent rise in January, the Commerce Department said. Business sales fell 1 percent to $836.4 billion, the most since November 2001, after rising 1.3 percent.

Blizzards over the Presidents Day weekend deterred shoppers, leading to an unplanned buildup in supplies of automobiles, building materials and food.

"A lot of the increase was just the effect of the snowstorms, which held down sales," said James O'Sullivan, an economist at UBS Warburg in Stamford, Conn. "I think there's plenty of room for inventories to be rebuilt."

The inventory-to-sales ratio, which measures the time goods sit on shelves, rose to 1.38 months in February from 1.36 months in January. That's the highest since March last year.

Initial reports show retail sales rebounding last month. A Commerce Department report Friday showed sales rose 2.1 percent last month, the most since October 2001. That might have helped companies clear out excess merchandise and prompt them to order more. Rebuilding of inventories contributes to economic growth.

"We are in a period of delicate transition following the Iraq war," Anthony Santomero, president of the Federal Reserve Bank of Philadelphia, said at a conference on global economic growth. "Developments bear close watching."

Santomero said he expects the economy to accelerate during the year to a "healthy and sustainable pace of around 3 to 4 percent" by the end of the year. In comments yesterday to a trucking conference, he cautioned that the recovery won't be a "smooth, even process."

Economists had expected a 0.3 percent gain in business inventories for February after a previously reported 0.2 percent rise in January, based on the median of 47 forecasts in a Bloomberg News survey.

Inventories at retailers, reported for the first time yesterday, rose 0.9 percent in February, after a 0.6 percent gain the previous month. Sales declined 1.5 percent after a 0.5 percent increase.

Among auto dealers, inventories increased 1.8 percent after rising 2.1 percent in January, the government reported. Building materials inventories increased 2 percent in February after falling 0.6 percent.

Stockpiles at manufacturers rose 0.4 percent. Sales fell 1.5 percent

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