April 9 (Bloomberg) -- Inventories at U.S. wholesalers rose more than forecast in February, reflecting the biggest slump in sales in more than a year.

The 1.1 percent gain followed a revised 1.3 percent increase in January that was larger than previously reported, the Commerce Department said today in Washington. Sales dropped 0.8 percent, the most since January 2007.

Distributors had enough goods on hand to last 1.12 months at the current sales pace, the most in five months. Wholesalers are likely to place fewer orders with factories in coming months as they try to clear shelves, limiting economic growth.

``Supply is starting to run ahead of demand and that could mean slower growth and also slower inflation further on down the line,'' said Jonathan Basile, an economist at Credit Suisse Holdings in New York.

Economists had forecast wholesale inventories would rise 0.5 percent, according to the median of 40 projections in a Bloomberg News survey, from a previously reported 1 percent increase in January. Estimates ranged from gains of 0.2 percent to 0.8 percent.

Wholesalers account for about a quarter of all business stockpiles. Factory inventories, which make up about a third of the total, rose 0.5 percent, the government said on April 2. Retail stockpiles will be included in the April 14 business inventories report.

Inventory accumulation may have been a positive for gross domestic product in the first quarter. Even so, any unwanted buildup would detract from growth in future quarters.

No Growth

The U.S. economy, the world's largest, will not expand at all from January through June, according to the median estimate of economists surveyed from April 2 to April 8. A majority now projects the U.S. is, or will soon be, in a recession.

The International Monetary Fund's World Economic Outlook released today projects the U.S. economy ``will tip into a mild recession in 2008 as a result of mutually reinforcing housing and financial market cycles, with only a gradual recovery in 2009.'' For all of 2008, the IMF forecasts U.S. growth of 0.5 percent, down from its previous forecast of 1.5 percent.

Weak Forecast

``Rising inventories likely reflect unanticipated shortfalls in demand and often heralds cutbacks in orders and production,'' John Ryding, chief U.S. economist at Bear Stearns Cos. in New York, wrote in a note to clients. This ``is a common recession dynamic.''

The increase in stockpiles was led by gains among auto, furniture and metals distributors.

Stockpiles at auto wholesalers rose 1 percent as sales dropped 1.9 percent. A 1.5 percent jump in furniture stocks reflected a 4.6 percent slump is sales that was the biggest since December 2002. Sales at hardware distributors declined 3.9 percent, the most since June 2001.

Auto inventories may decrease in coming months as manufacturers use existing parts while they wait for a five- week-old strike at American Axle & Manufacturing Holdings Inc. to be resolved. The parts shortage that has resulted from the walkout has forced General Motors Corp. to stall or shut production at its light-truck assembly plants throughout North America. GM also will shut a sport-utility vehicle assembly plant next week because of the strike.

Stockpiles of durable goods increased 0.7 percent and those of non-durable products, such as oil, rose 1.8 percent.

Petroleum Stockpiles

The value of petroleum stockpiles climbed 2.6 percent. The average price of crude oil futures traded on the New York Mercantile Exchange rose to $95.35 in February, from $92.93 a month earlier. Prices have continued to climb and may push up the value of petroleum inventories in March and April.

Rising prices for grains and other commodities may also be supporting the value of non-durable inventories. General Mills Inc., the second-largest U.S. cereal maker, said March 19 that the value of its grain inventories and hedging positions in energy, wheat and other commodities boosted profit by $151 million in the fiscal third quarter.

Private reports indicate manufacturers are cutting stocks while service industries are rebuilding. The Institute for Supply Management said April 1 that its measure of factory stockpiles fell to 44.9, showing further contraction.

The group's gauge of non-manufacturing inventories rose to 51. A reading of 50 is the dividing line between reductions and additions.

To contact the reporters on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net

Last Updated: April 9, 2008 10:38 EDT