Inventories Up 0.4% in March; Sales Off
Sales by U.S. businesses fell for the third consecutive month in March, the government reported Wednesday, and one analyst said the 1.6% decline reflected an economy that is “aimlessly and slowly drifting.”
The Commerce Department said the March setback was accompanied by a 0.4% increase in inventories, the biggest surge in stockpiles since a 0.5% rise last October.
The combination of slumping sales and rising inventories could spell trouble for domestic manufacturers in the months ahead as businesses cut back on orders in an effort to work down unwanted stockpiles.
The U.S. economy was mired all last year in weak growth of 2.2%. While the Reagan Administration is forecasting a strong rebound in growth this year, many analysts say there are few signs that the upturn has begun.
“The March figures for inventories and sales confirm that the economy is aimlessly and slowly drifting,” said Jerry Jasinowski, chief economist for the National Assn. of Manufacturers. “The dip in sales, especially for durable goods, suggests that consumers continue to retrench because of high debt burdens.”
The 1.6% fall in total sales, the biggest since a 1.7% decline in June, 1985, followed drops of 1.1% in February and 0.2% in January.
The string of sales declines left total sales at $420.3 billion in March, while inventories climbed to $587.7 billion.
Jasinowski predicted that economic growth will be held back to a weak 2% rate in the current April-June quarter, in part because production will slump as businesses work down inventories.
The inventory growth in March came primarily from a huge increase in stockpiles of unwanted cars. Auto dealers’ inventories hit an all-time high of $46 billion, 4.1% higher than in February.
Total retail inventories rose by 1.2%. But, without the big jump in autos, retail stockpiles would have grown by only 0.1%.
Inventories at the wholesale level rose 0.3%.
The drop in sales was led by a 2.4% decline in sales by manufacturers, followed by a 1% drop in sales at the wholesale level and a 0.9% fall in sales by retailers.
The combination of falling sales and rising inventories pushed the ratio of inventories to sales up to 1.40 in March, its highest level in almost three years.
