Business sales climbed 1.9% in March, the largest advance in more than a year, while the buildup of business inventories slowed, the government reported Friday.
The Commerce Department said total business sales rose to a seasonally adjusted $479.5 billion in March. It was the largest advance in 13 months and followed an equally strong 1.1% rise in February.
Business inventories were up 0.3% to $720 billion, the smallest rise since last August. Inventories had grown by 0.4% in February and 0.7% in January.
Analysts said the combination of booming sales and the slowdown in the growth of inventories should translate into continued strength in factory orders and production in the months ahead.
Success in Car Sales
The 0.3% rise in inventories included a tiny 0.1% increase in unsold goods at the retail level, a 0.2% rise at the manufacturing level and a 0.6% increase at the wholesale level.
David Wyss, an economist with Data Resources, said the fact that inventories were rising at the wholesale level meant that part of the buildup was occurring in imported goods and thus any needed production cutbacks in this area would not hurt domestic manufacturers.
Michael Evans, head of a Washington forecasting firm, attributed the small increase in retail inventories to the success car manufacturers have had with their sales incentives at reducing backlogs of new cars.
"The inventory problem is coming under control. . . . We're not looking at a major overhang in the second quarter," said Bill Griggs of the Griggs & Santow economic forecasting firm in New York.
"The thing that was really striking in these numbers was the strength of sales," he said, citing the biggest increase in more than a year. March sales rose 1.9% following a 1.1% rise in February.
The 1.9% rise in total sales was the largest increase since a 4.1% jump in February, 1987.