Washington, DC, May 11, 2006--Business inventories rose a larger-than-expected 0.7 percent in March as automotive and building material stocks climbed sharply, a government report showed on Thursday.
Wall Street analysts polled by Reuters had forecast a smaller 0.5 percent rise in inventories at retailers, wholesalers and manufacturers. February stocks were revised up to show a 0.1 percent gain rather than the flat reading initially reported.
Business sales kept pace with inventories, rising 0.7 percent in March after an unrevised 0.6 percent decline in February. This kept the inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, unchanged at 1.26 months, just above the record low of 1.25 months in January.
The leanness of the inventories-to-sales ratio helps economists gauge whether stocks are accumulating because demand has failed to meet expectations -- a sign of slowing in the economy -- or because companies are positioning themselves for a jump in future buying.
At a more detailed level within the report, retail inventories rose 1.0 percent while retail sales rose 0.6 percent. Stocks of motor vehicles and parts rose 1.7 percent after a 0.3 percent decline in February, while sales rose 1.0 percent.
Inventories of building materials, garden equipment and supplies rose 1.9 percent after a 0.5 percent decline in February. Sales of such items rose 1.6 percent in March.
Stocks at manufacturers rose 0.7 percent in March, just behind a sales increase of 0.8 percent, while wholesale inventories rose 0.2 percent, compared to a 0.7 percent sales increase.
