U.S. wholesale inventories increased more than initially thought in February, but inventory investment probably offered little or no boost to economic growth in the first quarter.
The Commerce Department said on Friday wholesale inventories rose 2.5% in February, instead of 2.1% as reported last month. Stocks at wholesalers advanced 1.2% in January. Economists polled by Reuters had expected inventories would be unrevised.
Wholesale inventories surged 19.9% in February on a year-on-year basis. Inventories are a key part of gross domestic product. Wholesale motor vehicle inventories rebounded 1.4% after declining 2.3% in January.
Wholesale inventories, excluding autos, increased 2.6% in February. This component goes into the calculation of GDP.
Inventory investment surged at a robust seasonally adjusted annualized rate of $193.2 billion in the fourth quarter, contributing 5.32 percentage points to the quarter's 6.9% growth pace. Most economists see further scope for inventories to rise, noting that inflation-adjusted inventories remain below their pre-pandemic level. Sales-to-inventory ratios are also low.
But inventories were probably not much of a boost to GDP growth in the January-March quarter as they would have needed to increase by more than the fourth quarter's pace.
Businesses are restocking after drawing down inventories from the first quarter of 2021 through the third quarter. Growth estimates for the first quarter are mostly below a 1.0% rate.
Sales at wholesalers increased 1.7% in February after jumping 5.0% in January. At February's sales pace it would take wholesalers 1.21 months to clear shelves, up from 1.20 months in January.
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