Facing Slowdown, Businesses Cut Inventories

Businesses coping with the economic slowdown whittled inventories of unsold goods in February by the largest amount in almost five years. The Commerce Department reported that stocks of goods on shelves fell by 0.2%. Sales slid by 0.3%. The 0.2% decline in inventories was the first since December 1998, when they were reduced by 0.1%, and the largest drop since a 0.3% decline in March 1996. The inventory-to-sales ratio, which measures how long it would take businesses to exhaust their inventories at February’s sales pace, was unchanged at 1.37 months. In February, retailers’ inventories fell by 0.4%, while sales were flat. Factory inventories slipped 0.1%, with sales off 0.5%. At wholesalers, inventories fell 0.1% and sales declined 0.2%. Car dealers’ inventories fell 1.5% in February, the biggest decline since June 1998, as sales rose 0.3%.