Business Inventories, Sales Rise in March

American businesses increased inventories by 0.4% in March as sales accelerated sharply after a February setback, the Commerce Department reported Friday.

The March increase in the amount of goods held on shelves and back lots followed a 0.5% gain in February. However, a portion of that growth reflected an unwanted accumulation as sales fell 0.5% during February.

March sales at all levels of business rebounded 0.7%, the best showing since a 1.2% sales jump in December. The increased sales helped slow the growth in inventories. The 0.4% rise in inventories was slightly below the 0.6% increase that analysts had expected.

In other economic news, the Labor Department reported Friday that the prices of imported goods rose 0.8% in April, the slowest pace in three months. The slowdown reflected the fact that oil prices last month retreated from record highs. Import prices had surged 2% in March.

The University of Michigan’s consumer sentiment index showed a larger-than-expected drop in confidence with the index falling at mid-month to a reading of 85.3, down from 87.7 in April. One of the components -- consumers’ expectations about the future -- fell sharply to 73.7 from 77 in April.

Ian Shepherdson, chief economist at High Frequency Economics in Valhalla, N.Y., said he believed consumer confidence would stabilize now, reflecting the fact that oil prices had fallen by about $10 a barrel from their highs of a month ago, helping to reverse some of the run-up in gasoline prices.