Retail inventories rose a sizable 0.5 percent for a second straight month in February led by motor vehicles where monthly inventories rose 0.9 and 0.8 percent in February and January respectively. Yet even when excluding vehicles, retail inventories were building, up 0.4 and 0.3 percent in the two months. Still, rising stocks of vehicles at dealers have been striking, up 22.6 percent on the year in February compared to 0.7 percent contraction excluding vehicles.

This report together with a 0.5 percent monthly build at wholesalers also reported this morning point to a positive inventory contribution to first-quarter GDP that would follow a negative contribution in the fourth quarter (a half percentage point).

Retail inventories measure the monthly dollar value of inventories held by retailers. The advance report is released late in the month for the following month and is part of the Monthly Advance Economic Indicators report (which also includes data on wholesale inventories and international trade in goods). Final monthly data for retail inventories are released about two weeks later with the Business Sales and Inventories report.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a slower rate of growth that won't lead to inflationary pressures. Retail inventory data give investors a chance to look below the surface of the visible economy, especially for unwanted build. If inventories are growing too fast relative to economic growth, then both production and employment will probably have to slow while those inventories are worked down.