Tuesday morning, the Commerce Department released its report on business inventories and sales in the month of February. While business inventories fell a little more than economists had expected, business sales showed a modest increase.

The report showed that business inventories fell by 1.3 percent in February, matching the revised decrease seen in the previous month. Economists had expected inventories to fall by 1.2 percent compared to the 1.1 percent decrease originally reported for January.

Notable decreases in inventories for manufacturers, retailers, and merchant wholesalers contributed to the slightly bigger than expected drop in total business inventories.

While manufacturers and retailers both saw inventories fall by 1.2 percent in February, merchant wholesalers reported a 1.5 percent drop in inventories.

At the same time, the Commerce Department said that business sales edged up 0.2 percent in February following a 1.2 percent decrease in January.

The modest increase in business sales was partly due to a 0.6 percent increase in sales by merchant wholesalers. Retailers also reported a 0.2 percent increase in sales, while sales by manufacturers edged down 0.1 percent.

With inventories falling and sales rising, the total business inventories/sales ratio slipped to 1.43 in February from 1.45 in January. The ratio came in at 1.29 in February of 2008.

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