US businesses increase inventories by a modest 0.3 per cent

WASHINGTON – U.S. businesses increased their stockpiles in February by a modest amount while their sales slowed a bit.

Business inventories rose by a seasonally adjusted 0.3 per cent in February after an identical increase in January, the Commerce Department said Friday. And sales rose 0.2 per cent in February after a slightly faster 0.3 per cent increase in January.

An effort by businesses to rebuild their stockpiles had added a full percentage point to economic growth in the October-December quarter, a period when the economy grew by a tepid 2.1 per cent, as measured by the gross domestic product.

But many analysts say they believe growth slowed in the January-March quarter, in part because they think inventories subtracted from overall economic activity. Economists at JPMorgan Chase are forecasting annual GDP growth of just 1 per cent in the first quarter.

Businesses spent much of last year working to reduce an overhang of unsold goods, a process that imposed a drag on growth. But economists say that process is nearing an end and the absence of a drag from inventory reductions should mean stronger growth later in 2017.

For February, stockpiles held by manufacturers rose 0.2 per cent. They increased 0.4 per cent at the wholesale level and 0.3 per cent at retailers.