US business inventories increased less than expected in February and sales recorded their smallest gain in eight months, a US government report has shown.
The Commerce Department said inventories rose 0.5 per cent to $1.46 trillion (£896m), the highest level since December 2008, after increasing by an upwardly revised one per cent in January.
Economists polled by Reuters had forecast inventories rising 0.8 per cent after a previously reported 0.9 per cent increase in January.
Inventories are a key component of gross domestic product changes and February's smaller-than-expected gain could prompt economists to lower their first-quarter GDP estimates.
Businesses sharply scaled back on restocking in the fourth quarter of 2010, resulting in inventories slicing 3.4 percentage points off GDP growth during the period. Economists expect a reversal in the first quarter.
Business sales rose 0.2 per cent to $1.17 trillion in February, the highest level since August 2008, after rising two per cent the prior month. February's total business sales reading was the weakest since June.
The weak sales pace left the inventory-to-sales-ratio, which measures how long it would take to clear shelves at the current sales pace, unchanged at 1.24 months.
City A.M. Reporter