Sales of wholesale goods slip in February

Posted April 08, 2011, at 8:18 p.m.

WASHINGTON — Wholesale businesses boosted inventories for the 14th consecutive month but sold fewer cars, pieces of furniture and petroleum products in February.

Sales at the wholesale level slipped 0.8 percent in February, the first setback since June 2010, the Commerce Department reported Friday.

Inventories rose 1 percent and have been rising for more than a year. The string of inventory gains pushed them to $438 billion, up 13.4 percent from the low reached in September 2009.

The drop in sales is likely temporary, given expectation for gains in consumer demand in coming months, supported by tax cuts and stronger employment growth.

Auto sales at the wholesale level dropped 2.2 percent, furniture sales fell 2.2 percent, and sales of petroleum products declined 1 percent. Sales of petroleum products had surged 10.8 percent in January, a rise that was heavily influenced by a spike in oil prices.

Economists see the continued gains in inventories as a sign of business confidence that demand will remain strong in coming months.

Steven Wood, an economist at Insight Economics, said sales had been growing at solid rates prior to February’s decline. He said that suggests strong demand, which should provide support for manufacturing in coming months.

Manufacturers have seen rising demand in the United States and overseas as the dollar has fallen against other currencies. That has made U.S. exports cheaper.

The Institute for Supply Management reported last week that manufacturing expanded in March for a 20th straight month.

 

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