WASHINGTON (Reuters) - U.S. wholesale inventories were a bit weaker than initially thought in March as sales increased by the most in 10 months.
The Commerce Department said on Thursday wholesale inventories slipped 0.1 percent, instead of being unchanged as previously reported. March’s drop in wholesale inventories was the first decline since October 2017.
Wholesale inventories increased 0.4 percent in February. They rose 6.7 percent on a year-on-year basis in March.
The component of wholesale inventories that goes into the calculation of gross domestic product was unchanged in March.
The government reported last month that inventory accumulation contributed 0.65 percentage point to the economy’s 3.2 percent annualized growth pace in the first quarter.
The advance March inventory data has led economists to expect that the initial GDP growth estimate would be trimmed to just below a 3.0 percent rate when the government publishes its revision later this month.
The first-quarter inventory build is expected to restrain growth at least by the third quarter as businesses place fewer orders with manufacturers while disposing the unwanted goods.
The inventory overhang is mostly visible in the automobile industry, despite recent decreases. Auto sales have been slowing. In March, wholesale auto inventories fell 0.9 percent after edging up 0.1 percent in the prior month. Wholesale apparel inventories increased 1.7 percent.
Sales at wholesalers jumped 2.3 percent in March, the largest increase since May 2018, after gaining 0.3 percent in February. There were increases in sales of motor vehicles, furniture, professional equipment and electrical goods.
At March’s sales pace it would take wholesalers 1.32 months to clear shelves, down from 1.35 month in February.
Reporting by Lucia Mutikani, Editing by Andrea Ricci