U.S. business inventories were unexpectedly flat in February as a drop in stocks of cars and parts offset a rise in wholesale inventories, data released by the Commerce Department showed on Thursday.

Wall Street analysts polled by Reuters had forecast a 0.3 percent rise in inventories at retailers, wholesalers and manufacturers after an upwardly revised 0.6 percent gain in January. This was initially reported as a 0.4 percent rise.

Business sales fell more steeply than inventories, declining 0.6 percent, compared with 1.2 percent growth the previous month.

This pushed the inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, up to 1.26 months, compared with a record low 1.25 months in January.

The leanness of the inventory-to-sales ratio helps economists gauge whether stocks are accumulating because demand has failed to live up to expectations — a bad sign for the economy — or because companies are positioning themselves for a jump in buying in the future, which would be good.

At a more detailed level within the report, retail inventories fell 0.3 percent in February while retail sales shrank 0.7 percent.

Stocks of motor vehicles and parts slipped 0.7 percent while automotive sales dropped 2.8 percent, moving this troubled sector of the U.S. economy's inventories-to-sales ratio to 2.04 months from 1.99 in January. American carmakers, battling high costs and tough foreign competition, have had to slash prices through steep rebates to protect domestic market share.

Building materials and supply stores reported a 0.5 percent fall in stocks in February. Manufacturers' inventories declined 0.4 percent while their sales dipped 1.1 percent. Wholesale inventories were up 0.8 percent against unchanged sales growth.