Business Inventories Rise Sharply For Second Straight Month

[Purveyor]

(04-14) 07:05 PDT WASHINGTON, (AP) --

Businesses saw inventories rise by a hefty amount for a second straight month, likely reflecting an unwanted buildup in stockpiles that will act as a drag on economic growth in coming months.

The Commerce Department reported Monday that inventories held by businesses on shelves and backlots increased by 0.6 percent in February after an even bigger 0.9 percent gain in January.

The increase in inventories, while boosting overall economic output in the first quarter, will likely act as a drag in coming months as businesses cut back on production to reduce stockpiles to more comfortable levels.

The inventory increase in February came at all stages of production. Manufacturing inventories rose by 0.5 percent, wholesale inventories were up 1.1 percent and retailers saw their stockpiles increase by 0.2 percent. The rise in inventories was accompanied by a drop in sales for the month.