US business inventories expanded in March, although the increase likely wasn’t big enough to warrant a significant revision to first quarter GDP.
Business inventories – a proxy for changes in aggregate demand that reflects future economic activity – rose 0.1 percent in March, following a gain of 0.3 percent the previous month, the Commerce Department reported on Wednesday. A median estimate of economists called for a gain of 0.2 percent.
Compared to year-ago levels, inventories were up 2.9 percent.
Retail inventories excluding automobiles, a key component that goes into the calculation of gross domestic product, rose 0.1 percent in March. Total retail inventories rose 0.3 percent from February and were up 3.2 percent from a year earlier.
Business sales were up 0.4 percent from February, but were down 2.1 percent from a year earlier. At the current sales pace, it would take businesses 1.36 months to clear existing inventories, up from the March 2014 ratio of 1.3.
The US economy expanded just 0.2 percent annually in the first quarter, weighed down by declining business investment and weak consumer spending. GDP growth is expected to rebound in the second quarter, mirroring last year’s growth trajectory. With US employers adding 223,000 nonfarm payrolls in April, the recovery appears to have emerged from the weather-induced soft patch of the first quarter.
The report was released shortly after the Commerce Department said retail sales were flat in April after rebounding in March. Seven of the 13 retail categories posted declines in April, with gasoline stations registering a 0.7 percent drop.