Inventories Expand; Optimism Index Up

U.S. wholesaler inventories rose in February as snowstorms and uneasiness about the pending war with Iraq limited spending on automobiles and other durable goods, the Commerce Department reported Tuesday.

U.S. consumer confidence, however, appeared to recover in early April from its depths, according to a separate report. The latest numbers on chain store sales, meanwhile, were soft, with several excuses offered, including bad weather, a late Easter and shoppers staying home to watch the war on TV.

The Commerce Department report showed that stockpiles grew 0.3% after no change in January. Excluding an increase in the value of petroleum products, wholesale sales fell 0.7%.

The report also showed that companies are trying to keep stockpiles in line with the pace of sales. The inventory-to-sales ratio, a gauge of how long goods sit at warehouses and on loading docks, held at 1.22 months’ worth, matching the lowest reading on record.

Stockpiles of durable goods, which include autos and metals, rose 0.7% in February after falling 0.1% the previous month. Shipments of imported autos gained 1.2%. Sales of durable goods fell 1.6%, the largest drop since September 2001, the month of the terrorist attacks, after rising 1% in January.

Imported-auto sales fell 4.3%, the most since a 7.6% slump more than five years ago. Sales of imported vehicles slowed to an annual pace of 2.1 million vehicles in February from 2.3 million in January. The industry’s rate of total deliveries dropped 4.9% to 15.4 million. Automakers have since stepped up discounts and promotions.

Instinet’s Redbook survey found chain-store sales fell 1.9% in the five weeks ended Saturday compared with the average for February, while the annualized pace of sales growth slowed to 1.7% from 1.5%.

The first assessment of consumer confidence in April came in the economic optimism index compiled by Investor’s Business Daily and TechnoMetrica Market. The gauge, which jumped to a 10-month high of 56.4 from 48.8 in March, has a good record of predicting moves in the better-known and more-influential consumer confidence indexes.

In a separate report on economic sentiment, a measure of business confidence fell to 53 in the first quarter from 58 in the fourth quarter, according to the Conference Board. The survey was conducted during the buildup to the war.

Bloomberg News was used in compiling this report.