Business cut back on stockpiles as sales fell again

Published April 13, 2016

Businesses reduced their stockpiles for a second straight month in February, while sales fell for a seventh month.

The Commerce Department says that business inventories dropped 0.1 percent after a similar 0.1 percent decline in January. Sales declined 0.4 percent after an even bigger 0.8 percent decline in January. Sales have been falling since August.

The weakness in inventory building has been holding back overall growth. It trimmed growth by 0.2 percentage point in the fourth quarter, and economists expect the slowdown in stockpiling to subtract an even larger 0.6 percentage point from first quarter growth.

The overall economy, as measured by the gross domestic product, grew by just 1.4 percent in the fourth quarter. Economists are forecast growth to come in below 1 percent in the first quarter.

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