WASHINGTON – Stockpiles on U.S. businesses shelves fell in March for the second month in a row, a positive sign for the economy which has been hampered by an inventory overhang.
The Commerce Department said on Monday that business inventories declined 0.3 percent to $1.213 trillion in March after a 0.4 percent drop in February. It was the first back-to-back monthly decline in inventories since January and February of 1992.
The March inventory drop was steeper than the 0.2 percent decline forecast by U.S. economists in a Reuters survey.
A clearing out of bloated inventories will help the economy by paving the way for businesses to ramp up production.
However, the report showed demand for goods remained somewhat sluggish. Business sales declined by 0.3 percent to $888.32 billion in March after a 0.4 percent decrease in February.
With sales and inventories falling by similar amounts, the stock-to-sales ratio, a measure of how long it would take to totally deplete stocks at the current sales pace, held steady at 1.37 months' worth.
The report showed car dealers made huge progress in paring back their inventories. Stocks of cars tumbled 1.3 percent in March to $118.68 billion after 1.8 percent drop in February.
The inventory-to-sales ratio for automotive dealers fell to 1.76 months' worth from 1.78 months in the prior month.
Inventories of durable goods -- items like cars and refrigerators that are built to last -- fell 0.8 percent in March after a 0.7 percent decrease in February.
Stocks of nondurable goods rose 0.5 percent after a 0.1 percent increase in February.