Business Inventories Rise 0.7 Pct.

Monday, October 16th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — U.S. companies boosted inventories in August by a brisk 0.7 percent, the best showing in two months, with retailers leading the way.

Stockpiles of goods on shelves and back lots nationwide rose to a seasonally adjusted $1.21 trillion, the Commerce Department said Monday.

August's increase was the largest since June, when inventories rose 0.8 percent and marked a stronger performance than the 0.4 percent increase many analysts were anticipating.

At the same time, businesses' sales posted a solid 0.5 percent gain to $902.3 billion — also the largest increase since June — following a steep decline the month before. Manufacturers showed the most strength.

August' sales increase pushed the inventory-to-sales ratio to 1.34 months, meaning it would take 1.34 months to exhaust inventories at the August sales pace. That was the highest since September 1999. In July, the ratio stood at 1.33 months.

The Federal Reserve has boosted interest rates six times since June 1999 to slow the pace of economic growth and its main engine, consumer spending, which would serve to keep inflation in check.

On the inventory front, retailers boosted inventories by 1.4 percent to $392 billion in August, the biggest gain since May. That followed a 0.1 percent drop the month before.

However, retailers' sales rose by just 0.1 percent in August to $270.9 billion after a big 0.8 percent gain.

Wholesalers increased their inventories by 0.6 percent to $326.3 billion, up from a 0.3 percent gain the month before. Sales at wholesalers rose modestly by 0.3 percent to $250 billion after a 0.3 percent decline in July.

Factories' inventories rose by 0.3 percent to $487.6 billion, down from a 0.9 percent rise. However, manufacturers led the way in sales with a sizable 1 percent increase to $381.4 billion. In July, factories' sales fell 1.7 percent.

In July, total inventories rose 0.4 percent, according to revised figures, stronger than the 0.2 percent increase the government previously estimated, while sales fell 0.6 percent, a sharper decline than estimated one month ago.