Business inventories rise unexpectedly in October

December 11, 2009 12:00:00 AM PST
Businesses unexpectedly increased their inventories in October, halting a slide of 13 consecutive declines. The small gain, along with a fifth straight increase in sales, raised hopes that businesses will begin restocking their depleted shelves, helping support the economic recovery.Businesses increased inventories 0.2 percent in October, the Commerce Department said Friday. That was better than the 0.3 percent drop economists had expected. Total business sales rose 1.1 percent.

The hope is that steadily rising sales will encourage businesses to restock shelves, which will boost factory production and bolster a broad recovery.

The overall economy, as measured by the gross domestic product, rose at an annual rate of 2.8 percent in the July-September quarter, the first increase after a record four straight quarterly declines. Many economists expect it is growing at a similar pace in the current quarter.

The increase in October inventories followed a 0.5 percent September decline. The biggest gain was a 0.4 percent rise in manufacturing inventories. Wholesale inventories rose 0.3 percent, while stockpiles held by retailers were flat in October.

Factories hold about one-third of all inventories, wholesalers hold 25 percent and retailers hold the rest.

The 13 consecutive declines in overall inventories was the longest stretch of weakness since a record 15 straight drops during a period that covered the last recession in 2001. But the total decline of 13.9 percent in the current slump is larger than the 7.6 percent drop that occurred during the last downturn.

The 1.1 percent rise in total business sales in October followed a 0.2 percent September increase. In a separate report Friday, the government said that retail sales in November rose 1.3 percent, better than economists had expected.


Load Comments