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Business inventories rose in August

U.S. business inventories rose by a larger-than-expected 0.7 percent in August and the previous month was revised upward, government data showed on Friday.
/ Source: Reuters

U.S. business inventories rose by a larger-than-expected 0.7 percent in August and the previous month was revised upward, government data showed on Friday.

The Commerce Department said August business inventories climbed to $1.256 trillion while sales increased 0.7 percent.

July stocks were revised to a 1.0 percent gain from a previously reported 0.9 percent advance, while sales were bumped up to a 0.9 percent increase from an initially reported 0.6 percent rise.

Wall Street analysts polled by Reuters had forecast a 0.6 percent climb in August inventories.

Economists see rising inventories either as a sign of confidence in future demand or as a result of an unexpected decline in sales which has led to involuntary stock building.

Deciding which of these interpretations is the case is helped by a sense of whether stocks are lean by historical standards from looking at the inventories-to-sales ratio.

This measure of the number of months it would take to deplete stocks at the current rate of sales edged down to 1.31 months from 1.32 months in July.

At a more detailed level within the report, retail inventories gained 0.7 percent in August while retail sales fell 0.1 percent on a 1.3 percent drop in auto sales. Excluding auto and parts sales, retail sales rose 0.3 percent.

Inventories at motor vehicle and parts dealers increased 0.9 percent after rising 1.8 percent the previous month. The industry has struggled to maintain high sales while reducing buyer incentives.

Earlier this month, the Commerce Department said wholesale inventories climbed 0.9 percent in August, as stocks of autos, metals and computer equipment swelled.