The U.S. economy contracted at a 1% annual pace in the first quarter compared with the previous quarter, the first contraction since 2011, the Commerce Department reported May 29.
The revised gross domestic product reading followed an initial GDP estimate last month of a 0.1% increase, which was largely pinned on bad weather and lower investment.
Companies boosted stockpiles by $49 billion in the first quarter, less than the $111.7 billion in the final three months of 2013.
Inventories subtracted 1.62 percentage points from GDP from January to March, the most since the fourth quarter 2012. Slower inventory accumulation may encourage factories to step up production should demand accelerate.
A second-quarter pickup at retailers, along with stronger manufacturing and faster job growth indicate the setback will prove temporary. A survey by Bloomberg economists estimates a 3.5% increase in second-quarter GDP.
The May 29 estimate was the second of three to be released by Commerce for the first quarter. The last contraction was in the first quarter of 2011.
The U.S. economy expanded at a 1.9% rate last year following a 2.8% increase in 2012.