Washington, Nov. 15 (Bloomberg) -- Inventories at U.S. factories, wholesalers and stores rose in September for a fifth straight month as sales declined the most in seven months, government figures showed. The 0.5 percent gain in inventories followed a 0.1 percent increase in August, the Commerce Department said. Sales at U.S. businesses fell 0.5 percent after rising 0.1 percent.
The increase in inventories may have been unintended because of the decline in business sales, which was the biggest since a 0.8 percent drop last February. It was further evidence that companies are being cautious in an uneven recovery. The inventory- to-sales ratio, a gauge of the time goods sit on store shelves, rose to 1.36 months' worth from a record low of 1.35 in August. ``I would look at the September inventory report as a reflection of unwanted inventory building and use that as a factor that is consistent with the weakness in industrial production that we saw in October,'' said Laurence H. Meyer, a former Federal Reserve governor who is now an adviser to Macroeconomic Advisers LLC in St. Louis. Industrial production dropped for the third straight month in October, the Federal Reserve reported. Production at the nation's factories, mines and utilities fell 0.8 percent last month, after dropping 0.2 percent in September
Economists had expected business inventories to gain 0.2 percent after a 0.1 percent drop originally reported for August, based on the median of 50 forecasts in a Bloomberg News survey.
Business Inventories
Businesses added inventories at a $1.9 billion annual pace in the third quarter after increasing stockpiles by $4.9 billion in the previous three months. Businesses had depleted their inventories for five straight quarters prior to that. The slower pace of inventory-building from July through September subtracted 0.07 percentage point from the economy's growth. That underscores the need for consumers to keep spending to propel the recovery, economists said. The economy is expected to expand in the fourth quarter at half the pace it did in the previous three months. Growth will cool to a 1.6 percent rate from October through December, following a 3.1 percent rate in the third quarter, according to the latest Blue Chip Economic Indicators survey of economists. Consumer spending will probably grow at a 1.1 percent annual pace this quarter, the slowest in more than nine years, after rising 4.2 percent from July to September, the Blue Chip survey showed. //www.quote.bloomberg.com