US business inventories rise moderately in February

WASHINGTON (Reuters) - U.S. business inventories increased slightly in February amid strong sales growth likely as households stocked up on goods ahead of tariffs on imports.

Inventories rose 0.2% after climbing 0.3% in January, the Commerce Department's Census Bureau said on Wednesday.

The rise in inventories, a key component of gross domestic product, was in line with economists' expectations.

Inventories increased 2.1% year-on-year in February. Inventories are the most volatile component of GDP. Private inventories were almost depleted in the fourth quarter amid robust consumer spending, some of it fueled by pre-emptive buying ahead of duties on imports to avoid higher prices.

Uncertainty stoked by a rapidly changing trade policy likely severely curtailed economic growth in the first quarter.

Economists' GDP growth estimates for the January-March quarter are mostly below a 0.5% annualized rate, with greater odds of a contraction. The economy grew at a 2.4% pace in the fourth quarter, with inventories a drag.

Retail inventories edged up 0.1% as estimated in an advance report published last month. They were unchanged in January. Motor vehicle inventories ticked up 0.1% rather than being unchanged as previously reported. They dropped 1.0% in January.

Retail inventories excluding autos, which go into the calculation of GDP, gained 0.1% as previously reported. They rose 0.5% in January.

Wholesale inventories increased 0.3% in February, while stocks at manufacturers climbed 0.1%.

Business sales rebounded 1.2% after declining 0.6% in January. At February's sales pace, it would take 1.35 months for businesses to clear shelves, down from 1.36 months in January.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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