WASHINGTON – U.S. business inventories grew slightly in January, in part due to a rise in the number of cars on dealer lots, the government said on Friday in a report suggesting businesses were cautious on the economic outlook amid the threat of war.
Economists say the historically low level of inventories means business will likely need to increase inventories when demand picks up, which would help to further bolster growth.
"The fact that inventories are low is a very positive sign in the sense that if there's any evidence that the economy is picking up inventory accumulation would being to move in a fairly pronounced pace," Federal Reserve Chairman Alan Greenspan told Congress last month.
Inventories at retailers, manufacturers and wholesalers rose 0.2 percent in January to a seasonally adjusted $1.147 trillion after a revised gain of 0.7 percent a month earlier, the Commerce Department said.
The rise matched expectations on Wall Street.
At the same time, sales climbed 1.2 percent, helping push the stock-to-sales ratio, a measure of how long it would take to deplete inventories at the current sales pace, down to a near-historic low of 1.36 months.
The department said retail inventories rose 0.7 percent, the same as in December, to reach a seasonally adjusted $429.40 billion. The department had previously reported that manufacturing inventories were unchanged in January, while wholesale stocks dipped 0.2 percent.
The rise in retail inventories reflected a big 1.9 percent increase in cars in dealer lots and on showroom floors. It was the biggest rise in auto inventories since a 2.8 percent jump in October of last year.
Stocks at clothing stores also rose sharply, while inventories at furniture and general merchandise stores advanced moderately. Building supply outlets and food stores saw inventories decline.