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Home » Latest News » US Business Inventories Rise Faster than Forecast in February

US Business Inventories Rise Faster than Forecast in February

Posted by FXTimes in Latest News - April 14th, 2015 2:05 pm GMT


US business inventories rose faster than forecast in February, although the gain likely isn’t big enough to offset low expectations for a disappointing first quarter.

Business inventories – a proxy for changes in aggregate demand that reflects future economic activity – rose 0.3 percent in February, following a gain of 0.2 percent the previous month, the Commerce Department reported on Tuesday. That was slightly more than the 0.2 percent increase forecast by economists.

Compared to year-ago levels, inventories were up 3.3 percent.

Retail inventories excluding automobiles, a key component that goes into the calculation of gross domestic product, rose 0.5 percent in February.  Total retail inventories were up 0.4 percent from January and were up 2.8 percent from a year earlier.

Business sales were virtually unchanged in February, but were down 1.2 percent from a year earlier. At the current sales pace, it would take businesses 1.36 months to clear existing inventories, up from the February 2014 ratio of 1.3.

The US economy is forecast to increase around 1.5 percent annually in the first quarter. Sales are expected to rebound in the second quarter, as a stronger jobs market, greater savings and an improved consumer climate boost economic activity.

The report was released shortly after the Commerce Department said retail sales rose in March for the first time in four months, easing concerns about a broader economic slowdown. Retail sales increased 0.9 percent in March, following a drop of 0.5 percent in February.

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