U.S. wholesale businesses increased their stockpiles by a modest amount in February, while sales kept falling.
Wholesale stockpiles edged up 0.3 percent in February after a 0.4 percent gain in January, the Commerce Department reported Thursday. Sales dropped 0.2 percent following a 3.6 percent decline in January, which was the largest decrease in six years. Sales have either fallen or been flat for the past seven months.
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Economic growth has slowed over the past six months, but economists are looking for a rebound this quarter led by stronger consumer spending. If consumers do return to stores after a winter break, the renewed demand is expected to boost inventory building in future months.
The slowdown in the January-March quarter reflected in part disruptions caused by the severe winter and a labor dispute at West Coast ports that delayed shipments to factories and businesses. Many analysts believe the economy, as measured by the gross domestic product, grew at a modest annual rate of 1.5 percent or less in the first quarter. That would be even weaker than the 2.2 percent GDP growth in the October-December quarter.
But analysts remain optimistic that growth will rebound in the current April-June quarter and the second half of this year. Many are forecasting growth will average a healthy 3 percent for the rest of the year.
That forecast depends on the economy weathering the hit that U.S. export sales are expected to take from a rise in the value of the dollar, which makes U.S. goods more expensive in overseas markets.
The Institute for Supply Management reported last week that its gauge of manufacturing activity slipped for a fifth straight month in March, falling to a reading of 51.5, down from 52.9 in February. The ISM survey found that demand for exports has been contracting for the past three months.