Inventories at U.S. wholesale businesses dropped in February

Inventories at U.S. wholesale businesses dropped in February as businesses trimmed stockpiles of petroleum, farm products and pharmaceuticals.

U.S. wholesalers' inventories declined by 0.3% from the prior month to a seasonally adjusted $501.36 billion, the Commerce Department said Tuesday. Economists had forecast a 0.6% increase in inventories during February.

The change in February inventories is the biggest decline since September 2011 and suggested businesses drew down their stocks to meet rising demand. Wholesale inventories rose by a revised 0.8% in January.

Sales at the wholesale level rose 1.7% in February, as businesses sold more computer equipment and nondurable goods. Petroleum sales rose the most since June 2008. Sales of durable goods, including cars and machinery, rose 0.4% during the month.

Wholesalers account for about one-third of all business inventories in the U.S., with manufacturers and retailers making up the rest. Total private inventories were a drag on modest overall economic growth in the fourth quarter of 2012, the Commerce Department said last month.

Many economists say the change in inventories this year will likely be positive for first-quarter growth because stockpiles in the automotive sector and elsewhere were relatively low at the end of last year.

The amount of wholesale goods on hand relative to sales in February was 1.19 compared with 1.21 the prior month. The ratio measures how many months it would take for a firm to reduce its current inventory.