U.S. Inventory Overhang Hangs On

By John S. McClenahen There's still another sign that U.S. manufacturing inventories, which began building up during 2000's second half, are probably not being worked down as fast as earlier anticipated. This past March, people actually spent $6.7 billion less on cars, appliances, and other durable goods than they did in February, reveal fresh inflation-adjusted data from the U.S. Commerce Dept.'s Bureau of Economic Analysis. That means the $13.6 billion month-to-month net growth in personal consumption expenditures came entirely from purchases of nondurables (up $4.1 billion to an annual rate of $1.896 trillion and services up $14.6 billion to a $3.627 trillion annual rate). "This means that the inventory build-up in manufacturing, which was primarily in durable goods, was not worked off in March as fast as we would have liked," says Jerry J. Jasinowski, president of the National Assn. of Manufacturers, Washington. "As we move to a full economic recovery, it is unfortunate that the completion of the inventory correction will likely be extended deeper into the second quarter."

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