Washington, DC, Mar. 12--U.S. business inventories rose 0.1% in January, an increase that was smaller than expected, as sales rose.
The Commerce Department said inventories edged up to a seasonally adjusted level of $1.194 trillion, after an advance of 0.3% in December.
The January increase was smaller than what was expected on Wall Street. Economists had projected an advance of 0.3%.
Rising demand for goods combined with caution by companies has caused liquidation of supplies, and inventory-to-sales ratios remain at abnormally low levels. The risk is that companies' supplies could fail to satisfy consumer demand, the feeding of which will be key to gross domestic product growth. But businesses have started building inventories and analysts expect further accumulation.
The report Friday showed business sales rose 0.4% in January, after climbing 1.4% the previous month.
The inventory-to-sales ratio was 1.33, unchanged from December's downwardly revised level. The inventory-to-sales ratio, an indicator of how well firms are matching supply with demand, measures how long it would take in months for a firm to sell all of its current inventory.
Retail inventories inched up 0.1% in January, after rising 0.3% the month before. Auto inventories rose 0.3%. Excluding the auto component, retail inventories would have been flat.
General merchandise stores rose by 0.2%. Food store inventories went up 0.3%. Stockpiles at furniture stores fell by 0.5%, while inventories at building materials, garden equipment and supplies stores increased 0.7%. There was a 0.6% decline in clothing inventories.
Earlier this month, Commerce reported that January wholesale inventories went up by 0.1% and factory inventories rose 0.2%. Year over year, business inventories climbed by 1.9% from January 2003 to January 2004. Sales increased by 6.4% during the same period.
