Inventories Rise 0.6%, in Line With Forecasts

<i> From Bloomberg News</i>

Inventories of goods at U.S. businesses rose in February as companies added stocks in anticipation that consumer demand would not slow.

Inventories rose 0.6% to $1.05 trillion, close to analysts’ expectations, after rising 0.1% in January, the Commerce Department said. Business sales, meanwhile, rose 0.8% in February, after falling 0.1% during January.

The inventory increase means “the economy is still growing pretty well, and there’s still room for future production” growth, said Suzanne Rizzo, an economist at Maria Fiorini Ramirez Inc. in New York.

February’s inventory increase also doesn’t foreshadow a slowdown in the months ahead, triggered by a backup of unsold goods, because technological improvements have made for fewer disruptions in the factory-to-retail pipeline.


The inventory-sales ratio--the number of months required to draw down existing stocks at that month’s sales rate--was unchanged at 1.37 in February. The ratio has hovered close to its historical low of 1.36 for more than a year, according to government statistics.

Retail inventories rose 0.1% in February, after climbing 0.2% in January. Wholesale and factory inventories showed bigger gains of 1.1% and 0.5%, respectively. Lower-cost imports from Asia, a reflection of the strong dollar, have fueled shipments of imported goods into wholesalers’ inventories, analysts said.

The government also said Wednesday that prices U.S. businesses paid for imported goods fell in March for the fifth consecutive month, reflecting falling oil prices and the effects of the crisis in Asia on the cost of manufactured goods.

Import prices fell 1% in March, following a 0.8% drop in February, Labor Department figures showed.


Petroleum import prices dropped 9.2% last month. Excluding petroleum, import prices decreased 0.2% during March, dampened by a decline in prices of capital goods and consumer products, excluding autos.

Prices of U.S. products exported to other countries fell 0.2% in March as farm prices declined. Agricultural exports dropped 0.6% last month, and nonagricultural export prices fell 0.3%.