Wholesale Inventories Rise 0.5%
Bad Weather Blamed For Soft First Q
U.S. wholesale inventories increased modestly in February, new data shows, providing more evidence that the economy is growing, but slowly. The Commerce Department said this week that wholesale inventories rose 0.5%, following a 0.8% jump in January. The data supports expectations among economists that GDP expanded by around 2% in the first quarter of 2014, as companies weren’t able to sell their stockpiles of items built up last year.
Inventories of durable goods – like phones and appliances – rose 0.7% in February, while inventories of nondurables nudged higher by 0.1%. Data showed stockpiles of cars and auto parts rose 0.5%, while lumber stockpiles increased 1.2%. At February’s pace of sales, it would take 1.19 months to clear shelves – a poor ratio that’s unchanged from January. A turnaround could be coming, though, as wholesalers’ revenues did improve by 0.7% in February after decreasing by 1.8% a month earlier.
Analysts have blamed bad weather for soft economic data during the first quarter, but have pointed to Q2 as a true barometer for gains or losses. Inventory building contributed significantly to the 4.1% GDP expansion in Q3 of 2013, but by Q4 the contribution shriveled to just 0.03%. The increase in February’s wholesale inventories was in line with forecasts. The rise reported for January was revised from an earlier total of 0.7%.