U.S. businesses increased their stockpiles slightly in March, while their sales were flat.
The Commerce Department says business inventories rose by a seasonally adjusted 0.2 percent in March, matching February's gain. And sales were unchanged in March after inching up 0.2 percent in February.
Continue Reading Below
An effort by businesses to rebuild their stockpiles had added a full percentage point to economic growth in the October-December quarter, a period when the economy grew by a tepid 2.1 percent as measured by the gross domestic product.
But growth slowed in the January-March quarter, in part analysts say because inventories subtracted from overall economic activity. Annual GDP growth was just 0.7 percent in the first quarter.
Businesses spent much of last year working to reduce an overhang of unsold goods, a process that imposed a drag on growth. But economists say that process is nearing an end and the absence of a drag from inventory reductions should mean stronger growth later in 2017.
For March, stockpiles held by manufacturers were unchanged. Makers of autos and vehicle parts had a big boost in inventories of 0.9 percent as their sales dropped 0.5 percent. Sales of building materials plummeted 1.7 percent in March. Overall, inventories rose 0.2 percent at the wholesale level and 0.5 percent at retailers.