U.S. business inventories rise more than expected in January

WASHINGTON, (Reuters) - U.S. business inventories increased more than expected in January as sales rose moderately, and businesses were taking the longest time in nearly 1-1/2 years to clear shelves, a sign of slowing demand.

The Commerce Department said on Monday that business inventories rose 0.8 percent in January. Data for December was revised higher to show inventories advancing 0.8 percent instead of the 0.6 percent increase previously reported.

Inventories are a key component of gross domestic product and economists polled by Reuters had forecast stocks at businesses rising 0.5 percent in January.

The January business inventory report was delayed by a five-week partial shutdown of the federal government that ended on Jan. 25. The February report, which was scheduled to be published on April 16, will now be released on April 18.

Retail inventories increased 0.8 percent in January after surging 1.1 percent in December. Motor vehicle inventories jumped 1.2 percent, the biggest gain since August 2018.

Retail inventories excluding autos, which go into the calculation of GDP, increased 0.6 percent in January after rising 1.3 percent in the prior month. This suggests inventory investment could contribute to first-quarter GDP.

Wholesale inventories increased 1.2 percent in January, the most since September 2012. Stocks at manufacturers rose 0.5 percent. The government reported last week that inventory investment added 0.11 percentage point to the fourth quarter’s 2.2 percent annualized growth rate.

Business sales rebounded 0.3 percent in January after dropping 0.9 percent in December. Retail sales rose 0.8 percent in January. Sales at wholesalers advanced 0.5 percent while those at manufacturers fell 0.4 percent.

At January’s sales pace, it would take 1.39 months for businesses to clear shelves, the most since August 2017, up from 1.38 months in December.

Reporting by Lucia Mutikani; Editing by Andrea Ricci; 1 202 898 8315; Reuters Messaging: