Business inventories fell for the seventh straight month, down 1.0 percent on the month and largely in line with expectations. The new data and a slight downward revision to February supports BEA's assumption that inventories subtracted significantly from first quarter GDP. Further draw down is needed in the second quarter.

Inventories and Sales Still Falling Fast

• Inventories declined 1.0 percent in March in another significant reduction in stockpiles across the supply chain.

• Sales were down across all major sectors, especially in the retail space which caused its inventories to sales ratio to bounce upward once more. This morning's advance retail sales report for April denotes slowing sales will continue to be a problem for retailers in coming months.

Drawdown to Continue

• Inventories to sales ratios ticked up slightly for the retail, manufacturing, and wholesale sectors. Recent hopes that stronger sales might be on the horizon are rapidly diminishing.

• Motor vehicles and parts dealers saw the largest decline in inventories in the retail space, which is the only true new data in this release. As production halts at GM and Chrysler work through the system inventories should fall even further.