U.S. wholesale inventories increased at a slower pace in February as sales rebounded, the government reported Wednesday, supporting views that restocking will not help the economy in the first quarter. The Commerce Department said wholesale inventories rose 0.5 percent following a 0.8 percent advance in January. The February increase was in line with economist expectations. Sales at wholesalers rebounded 0.7 percent from a sharp 1.8 percent decline in January. Inventories are a key component of changes in gross domestic product (GDP). The component that goes into the calculation of GDP—wholesale inventories excluding autos—rose 0.5 percent in February. Farm inventories jumped 2.7 percent after dropping 0.9 percent the previous month. U.S. businesses accumulated too much inventory in the second half of 2013 and are placing fewer orders with manufacturers while they work to sell the pile of goods. That factor, together with severe winter weather, the expiration of long-term unemployment benefits, and cuts to the food-assistance program, are expected to limit first-quarter GDP growth. The economy grew at a 2.6 percent annual rate in the fourth quarter, with no contribution from inventories. First-quarter growth estimates range from as low as a 0.6 percent annual rate.
