Inventories Unchanged in March; Sales Increase .6%

Business inventories were unchanged in March after advancing during the two previous months, the government reported today, while sales rose 0.6% for their third consecutive gain.

The Commerce Department said inventories on shelves and back lots totaled a seasonally adjusted $794.0 billion after rising a revised 0.4% in February and 0.3% in January. Inventories in February originally were reported to have fallen 0.4%.

Sales totaled a seasonally adjusted $539.1 billion following gains of 1.4% in February and 0.4% in January. The February increase was first reported to have been 1.3%.

The March business activity produced a 1.47 ratio of inventories to sales, matching a 1.47 ratio in January, 1989, which was the lowest since the current economic expansion began after the 1981-82 recession. The ratio means that it would take 1.47 months to exhaust inventories at the March pace.

Rising sales and falling inventories are a sign of economic strength. If inventories were to rise excessively, it could mean cutbacks in production and a loss of jobs. For instance, the ratio peaked at 1.70 in October, 1982, during the last recession.

The inventory decline was centered in the manufacturing sector, where it fell 0.3%. Inventories edged up 0.3% at the retail level and 0.2% at the wholesale level.

Sales, on the other hand, dropped 0.2% at the retail level. The Commerce Department reported last Friday that retail sales fell another 0.6% in April, the biggest plunge in six months.

Manufacturing sales rose 1.1% and wholesale sales advanced 0.8%.