WASHINGTON – Wholesale businesses stepped up their restocking of supplies in March, but their sales fell sharply.
The Commerce Department said Thursday that stockpiles held by wholesalers rose 0.4 percent in March compared with February, when they had fallen 0.3 percent.
Sales in March dropped 1.6 percent, the biggest setback since March 2009, when the country was in recession. Sales had risen 1.5 percent in February.
Inventory rebuilding can be a positive for economic growth because it means stronger production at the nation’s factories. The March increase left inventories at $503.1 billion, up 4.7 percent from a year ago and 30.7 percent above the recession low.
But increased restocking at a time of falling sales can signal trouble for the economy. The falling demand could lead businesses to reverse course and cut their stockpiles. Those cutbacks would dampen factory production and economic growth.
The buildup of inventories in March was due largely to a 0.5 percent increase in restocking of durable goods. These are items that are expected to last at least three years.
The report on inventories was one of several released Thursday, providing an economic snapshot including on retail sales.
Falling gasoline prices, a rallying stock market and gains in the job market all fueled Americans’ shopping habits even as cold weather tempered their desire to buy spring fashions.
Revenue at stores open at least a year – an industry measure of a store’s health because it excludes results from stores recently opened and closed – rose 4.7 percent in April compared with the same month a year ago, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers trade group.
That continues a trend that Americans started in early spring. In March, revenue rose 2.2 percent. And for the combined months of March and April, the figure rose 3.5 percent.
April turned out to be decent despite adverse weather conditions, said Michael P. Niemira, chief economist at the ICSC.
While big chains such as Wal-Mart Stores Inc., Target Corp and Macy’s Inc. don’t report monthly revenue, the stores that do offer economists a snapshot of consumer spending habits. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.