Washington, DC, Apr. 14--Businesses' stockpiles of unsold goods rose in February as sales fell amid prewar jitters. According to the Commerce Department, business inventories went up 0.6% in February, compared with a 0.3% rise in January.
Businesses' sales, meanwhile, dropped 1% in February, the biggest decline since November 2001. That erased part of January's 1.3% gain.
The report highlighted one of the big challenges facing businesses during these muddled economic times: trying to gauge consumers' demand for their products.
The Business Roundtable, an advocacy group of chief executive officers from some of the United States' largest companies, found that consumers' uneven appetites for spending is among their top concerns, according to a survey taken last week.
Profit-pressed businesses and battered manufacturers have been reluctant to make big investments in capital projects or in hiring, a major factor holding back the economic recovery. Turning that situation around may take time, even with a swift military victory in Iraq, some economists say.
The Federal Reserve in March decided to keep interest rates at a 41 year low of 1.25% in a bid to help energize the listless economy. Some economists believe the Fed is likely to keep rates at that low level, especially given last week's surprisingly strong retail sales report.
Consumers snapped out of a funk in March and splurged on cars, garden supplies and furniture, sending retail sales up by the largest amount in 17 months. Another report last week showed that consumers' confidence in the economy improved in April.
Those reports raised hopes that consumers will keep their wallets and pocketbooks sufficiently open to prevent an economic slide into recession.
Those reports also made economists more hopeful that businesses might be adding more aggressively to their inventories going foward if they see sales picking up.
Inventories at factories rose 0.4% in February as sales slid by 1.5%. Retailers saw inventories go up 0.9% in February, the largest increase since September, as sales dropped 1.5%. At wholesalers, inventories rose 0.3% even as sales increased 0.5%.
