U.S. wholesale inventories fell for the fifth consecutive month in January and sales plummeted amid a slump in demand, a government report showed on Tuesday.

Inventories were depressed by record drops of 4.8 percent in autos and 3.5 percent in furniture as companies sharply cut back output to deal with slackening demand as the economy battles a 14-month recession.

Compared to the same period a year ago, inventories rose 1 percent.

Economists polled by Reuters had expected a 1 percent drop in January from December. Sales fell 2.9 percent in January after falling by a revised 3.7 percent the previous month. December sales were previously reported as 3.6 percent lower.

Overall sales were dragged down by a record 6.5 percent dive in durable goods sales.

Household incomes have been pinched by a combination of rising unemployment and plummeting asset values, causing consumers to shun big-ticket items. The unemployment rate rose to 8.1 percent in February, the highest level in a quarter of a century.

Falling sales lifted the inventory-to-sales ratio, a measure of how long it would take to sell stocks at the current sales pace, to 1.30 months' worth - the highest since a matching reading in January 2002 -- from December's 1.27 months.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Unemployment Fall