Total business inventories grew just 0.1% during March. The gain was less than the expected 0.4% rise and the 0.5% February increase was little revised. The annualized three month growth in inventories backed off slightly to 6.6% from the elevated 8.5% growth rate in February.

Retail inventories fell 0.5% as the three month growth rate went negative at -0.9%. Inventories of motor vehicle & parts fell at a 0.9% rate during the last three months due to production cutbacks. Outside of autos, however, retail inventories plunged 0.4% in March and at a 1.0% rate during the last three months, the first decline since 2003.

The industry detail in the retail sector indicated that furniture inventories fell at an annual rate of 7.0% during the last three months. Clothing & accessory store inventories also dropped hard at a 7.9% rate during that period. General merchandise stores' inventories finally fell at a 2.9% rate due to the 1.1% cutback in March.

Factory inventories increased 0.9% following the upwardly revised 0.7% February increase. Higher oil prices continued to drive the increase and they rose 5.3%, 89.9% at an annual rate over the last three months. But elsewhere accumulation also has been strong. Excluding petroleum, factory inventories rose at a 7.9% rate over the last three months versus 5.9% growth during 4Q and 1.7% in 3Q.

Wholesale inventories fell 0.1% after the 0.9% February surge. Less the strong gains in petroleum inventories, accumulation still has been very firm at a 9.9% rate over the last three months after 4.9% growth last year.

Total business sales rose 1.0% and made all of the prior month's decline. Three month growth recovered to 5.5% after having gone negative in February. The I/S ratio fell slightly to 1.27 in March. That's the average for the year to date and it is equal to all of 2007.