US business inventories post first drop in nine months

WASHINGTON, Feb 14 (Reuters) - U.S. business inventories fell for the first time in nine months in December as strong domestic demand depleted stocks at retailers and wholesalers.

Inventories dropped 0.2%, the first decline since March, after gaining 0.1% in November, the Commerce Department's Census Bureau said on Friday.

Economists polled by Reuters had forecast inventories, a key component of gross domestic product, being unchanged.

Inventories increased 2.0% on a year-on-year basis in December. Inventories are the most volatile component of GDP. Private inventory investment was a big drag on GDP in the fourth quarter, restricting economic growth to a 2.3% annualized rate. The economy grew at a 3.1% pace in the July-September quarter

Retail inventories decreased 0.4% rather than 0.3%, as estimated in an advance report published last month. They edged up 0.1% in November.

Motor vehicle inventories declined 1.1% instead of the previously reported 1.2%. They dropped 0.8% in November.

Retail inventories excluding autos, which go into the calculation of GDP, slipped 0.1%, instead of increasing 0.2% as previously reported. They increased 0.6% in November.

Wholesale inventories decreased 0.5% in December, while stocks at manufacturers increased 0.4%.

Business sales increased 0.8% in December after rising 0.6% in November. At December's sales pace, it would take 1.35 months for businesses to clear shelves, down from 1.37 months in November.