Business Inventories Climb Less Than Expected in March

Business inventories climbed less than expected in March, though the smaller build in stockpiles was not a complete surprise given the revision to March retail sales earlier this morning. We still expect first quarter GDP will likely get a positive revision, but smaller inventory building will be a drag.

Inventories Climb at Slowest Pace in a Year

• Alleviating some concerns of an inventory bulge, total business inventories climbed 0.1 percent in March, the smallest monthly increase in the last year.
• The inventory-to-sales ratio has come down as well. This is a positive sign that businesses are generally gauging demand in their markets accurately.

Factory Inventories Are Building Faster Than Sales

• Inventories on the wholesale and retail level actually experienced a drawdown in March, but were more than offset by gains in manufacturer's inventories - a recent sore-spot.
• The inventory-to-sales ratio of the same series suggests that retailers and wholesalers are more effectively managing stockpiles, while factories may need to scale back production.

Wachovia Corporation
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