15 January 2003, 17:24  U.S. Nov. Business Inventories Rise 0.2%; Sales, 0.3%

Washington, Jan. 15 (Bloomberg) -- Inventories at U.S. factories, wholesalers and stores rose in November for the seventh straight month as retailers boosted stocks to meet higher demand, government figures showed. The 0.2 percent increase in inventories followed a 0.1 percent gain in October, the Commerce Department said. Sales at businesses rose 0.3 percent after rising 0.5 percent. Companies are restocking as rising consumer spending has run down inventories. OfficeMax Inc., the No. 3 U.S. office-supply retailer, had the best holiday season in three years, helping it to keep inventory lean and leaving room to rebuild supplies. This may lend momentum to the recovery because when companies order more goods factories and other suppliers can hire and expand their sales and profits. ``Inventories remain very lean, so as the prospects for demand improve, there should be a drive to restock inventories which should boost growth further,'' said Geoffrey Somes, an economist at Fleet Bank in Boston. Economists had expected a 0.1 percent increase in business inventories, based on the median of 48 forecasts in a Bloomberg News survey, after a 0.2 percent gain originally reported for October. Inventories have been rising since May and at $1.136 trillion, stocks are the highest since October 2001. They are still 5 percent below the $1.2 trillion reached in January 2001.
U.S. Treasury notes erased losses after a Labor Department report showed prices paid to producers were unchanged in December, as slow economic growth limited pricing power. Bonds were also responding to the business inventories report. The Treasury's benchmark 4 percent note maturing in November 2012 was unchanged at 8:48 a.m. in New York, with the yield at 4.08 percent.
Retail Inventories Rise 0.8%
The November inventory-to-sales ratio, a gauge of the time goods sit on store shelves, held at 1.36 months. It was a record low of 1.35 in August. Retail inventories led the overall increase, rising 0.8 percent after gaining 0.7 percent in October. Stocks at stores make up one-fourth of total business inventories and were reported today for the first time. The other, previously reported, components of the report are factory inventories, which make up almost half the total, and wholesaler stockpiles, which account for one-fourth. Retail sales increased for the second straight month, climbing 0.9 percent after rising 0.1 percent. Supplies of goods at home furnishings, food and clothing stores rose and those at building material suppliers fell.
Auto Inventories
Auto inventories rose 1.7 percent as sales increased 2.6 percent. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler unit raised their supplies of unsold cars and trucks sitting on dealer lots before Christmas to around a 90-day-supply, well above the typical 73-day-supply. Stockpiles at manufacturers were down 0.3 percent in November after declining 0.1 percent the month before. It was the biggest drop since May as goods producers continued to struggle amid weak global demand and excess capacity. Sales fell 0.8 percent after rising 1.2 percent in October. Wholesale inventories gained 0.2 percent in November after falling 0.5 percent in October. Sales rose 1.2 percent, after no change the previous month. Retailers may be poised to keep restocking as the economy recovers, which may add to economic expansion this year, economists said. The economy is forecast to grow 2.8 percent this year, up from an estimated expansion of 2.4 percent in 2002, according to the Blue Chip Economic Indicators survey of economists. ``Inventories are following demand rather than leading it,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. OfficeMax said last month that sales at stores open at least a year rose more than 10 percent between Thanksgiving and Christmas, led by electronic products such as digital cameras.
``Our inventory position is the best it's been in years, and we'll finish right in line with inventory,'' said Michael Feuer, the company's chief executive, in an interview last month. //www.quote.bloomberg.com

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