US inventories post February gain, but don't blow the doors off

An employee operates a forklift at the distribution center of the Oregon Freeze Dry facility in Tangent, Oregon.
Leah Nash | Bloomberg | Getty Images

U.S. wholesale inventories rose at a slower pace in February than in the prior month, which could support views that restocking will not help the economy in the first quarter.

The Commerce Department said on Wednesday wholesale inventories increased 0.5 percent after a revised 0.8 percent gain in January.

February's increase was in line with economists' expectations. Stocks at wholesalers had previously been reported to have increased 0.7 percent in January.

Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP - wholesale stocks excluding autos - rose 0.5 percent in February. Farm inventories jumped 2.7 percent after falling 0.9 percent the prior month.

Businesses accumulated too much stock in the second half of last year and are placing fewer orders with manufacturers while they work through the pile of unsold goods.

That, together with severe weather, the expiration of long-term unemployment benefits and food stamps cuts, is expected to weigh down on first-quarter GDP growth.

The economy grew at a 2.6 percent annual rate in the fourth quarter, with no contribution from inventories. First-quarter growth estimates range from as low as a 0.6 percent rate.

In February, sales at wholesalers rebounded 0.7 percent. Sales had declined 1.8 percent in January.

At February's sales pace it would take 1.19 months to clear shelves, unchanged from January.

--By Reuters