WASHINGTON (Reuters) - U.S. business inventories increased more than expected in February amid a moderation in sales, data showed on Thursday.
Business inventories rose 1.5% after climbing 1.3% in January, the Commerce Department said. Inventories are a key component of gross domestic product. Economists polled by Reuters had forecast inventories rising 1.3%.
Inventories jumped 12.4% on a year-on-year basis in February. Retail inventories increased 1.2% in February, instead of 1.1% as estimated in an advance report published last month. That followed a 2.0% rise in January.
Motor vehicle inventories rose 0.9% as estimated last month. They increased 2.7% in January. Retail inventories excluding autos, which go into the calculation of GDP, climbed 1.4%, rather than 1.2% as estimated last month.
Inventory investment surged at a robust seasonally adjusted annualized rate of $193.2 billion in the fourth quarter, contributing 5.32 percentage points to the quarter's 6.9% growth pace. Most economists see further scope for inventories to rise, noting that inflation-adjusted inventories remain below their pre-pandemic level. Sales-to-inventory ratios are also low.
Businesses are restocking after drawing down inventories from the first quarter of 2021 through the third quarter. Growth estimates for the first quarter are around a 1.0% rate.
Wholesale inventories increased 2.5% in February. Stocks at manufacturers gained 0.6%.
Business sales rose 1.0% in February after rebounding 4.1% in January. At February's sales pace, it would take 1.26 months for businesses to clear shelves, down from 1.25 months in January.