Reports to Show Continued Weakness

U.S. industrial production fell in March and lagging sales caused inventories to grow in February as the nation was building toward war in Iraq, economists said in advance of government reports this week.

The weakness at the nation’s factories may have extended into April.

“Manufacturing just isn’t kicking up yet,” said Tim Rogers, chief economist at Briefing.com in Boston. “You’re not going to see that improved, or a rebuilding in inventories, until the whole economy comes back.”

Inventories at factories, retailers and wholesalers rose 0.3% in February, the Commerce Department is expected to report today, based on the median forecast of 47 economists. Snowstorms in the Northeast and Midwest closed stores and brought shipping to a halt.

The buildup in inventories may have left some companies with unwanted stockpiles, forcing factories to slow assembly lines in March and April.

Tuesday’s Fed report on industrial production will probably show a decline of 0.2% in March, the first drop in three months, based on the median forecast in a Bloomberg News survey of 56 economists.

“There’s a lot of apprehension,” said Robert Rude, president of ERS Industries Inc., an East Aurora, N.Y., distributor of cranes and other railroad equipment. “With the war ending, that’s going to be a big plus simply because people would get away from the television.”

With manufacturing in a rut, workers are finding it hard to hang on to jobs. The Labor Department is expected to report that the number of Americans filing new claims for state unemployment benefits rose to 410,000 last week. That would be the ninth straight week above 400,000, a reading that some economists consider a sign of a stagnant job market.

Increased gasoline prices probably helped push the consumer price index up 0.4% in March, the Labor Department is forecast to report Wednesday.

The housing market is expected to continue to escape the weakness in the rest of the economy thanks to low mortgage rates.

A snapshot of the week’s upcoming reports:

* Today, the Commerce Department reports on business inventories for February.

* Wednesday, the Commerce Department reports on housing starts for March and the Labor Department reports on the consumer price index for March.

* Thursday, the Labor Department reports on weekly jobless claims and Freddie Mac, the mortgage company, reports on mortgage rates.

* Friday, the Treasury Department reports on the federal budget for March.