The Economy

Business Inventories Increase 0.5% in February

February’s gain in the GDP component, which was in line with economists’ expectations, followed a 0.4% advance in January.
Matthew HellerApril 15, 2021

U.S. business inventories rose again in February, an indicator of economic growth as companies restock after pandemic shutdowns.

The Commerce Department estimated manufacturers’ and trade inventories at an end-of-month level of $2,010.8 billion, up 0.5% from January but down 0.7% year over year.

February’s gain, which was in line with economists’ expectations, followed a 0.4% advance in January.

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Retail inventories were unchanged while motor vehicle inventories fell 2.6%. “Motor vehicle stocks are dwindling as a global semi-conductor shortage hampers auto production,” Reuters said.

Retail inventories excluding autos increased 1.2% as estimated last month, following a 0.2% gain in January.

Inventory investment has contributed to GDP growth for two straight quarters. Growth estimates for the first quarter are as high as a 9.7% annualized rate and GDP is expected to increase more than 7.0% this year, which would be the fastest since 1984 and would follow a 3.5% contraction last year, the worst performance in 74 years.

Business sales fell 1.9% in February after rising 4.5% in January. At February’s sales pace, it would take 1.30 months for businesses to clear shelves, up from 1.27 months in January.

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