Business Inventory Feb 2008

--Inventories at U.S. businesses roseat a slower pace than sales in January, reflecting efforts by companies to draw down stockpiles as they brace for weaker demand. --The 0.8 percent gain was larger than forecast and thebiggest since June 2006, the Commerce Department said today inWashington. Sales rose 1.5 percent, the most since March 2007. --A separate Commerce report today showed retail sales unexpected fell in February, signaling efforts to pare inventories will lead to cutbacks in orders to wholesalers and factories. A manufacturing slowdown will likely contribute to the onset of a recession this year as the housing slump deepens. --The other report from Commerce today showed sales at U.S.retailers dropped 0.6 percent in February, led by a decline atauto dealers. The decrease indicates falling payrolls and homevalues and surging energy costs have tipped the economy into arecession. --One bright spot in the report on business inventories was that the jump in January sales left the amount of stockpiles on hand at a 1.25 months' supply, matching a record low. --Retail stockpiles, the only part of today's inventoriesreport that was not previously released, increased 0.4 percent. --A drop in stockpiles at automakers led to an unexpected decline in total inventories in the fourth quarter and was one ofthe major reasons the economy grew at a less than forecast 0.6 percent annual rate. Stockpiles fell at a $10.1 billion annualpace, the biggest decline in almost six years, and subtracted 1.5percentage points from growth. --Retail inventories account for about a third of all businessinventories. Factory stockpiles, which account for about 35 percent, gained 1.3 percent in January after a 0.9 percentincrease the prior month, Commerce said. --Wholesalers' stockpiles, which account for the rest, rose 0.8 percent after a 1.1 percent increase the prior month, theCommerce Department said. Wholesale sales rose 2.7 percent, the most since March 2004. --Wholesale stockpiles were pushed up by gains in oil prices.Crude oil futures traded on the New York Mercantile Exchangeaveraged $92.91 a barrel in January, up from $91.74 a barrel inDecember. Prices have since continued to rise above $100 abarrel. --Consumer spending in the current quarter may slow to a 0.5percent pace, the slowest since 1991, according to a Bloombergsurvey taken last week, as record fuel costs and falling homevalues weigh on household spending.