Inventories at U.S. businesses unexpectedly fell by 0.5% in July, led by a drop in motor vehicles and parts, the Commerce Department said Thursday. Economists polled by MarketWatch had been looking for a rise of 0.1% in inventories. Inventories at motor vehicle and parts dealers fell by 5.4% on the month. Total business sales, meanwhile, rose 1.1%, the Commerce Department said. The report reflects data taken before Hurricane Katrina hit the Gulf Coast region in late August. Retail inventories decreased by 1.8%, while retail inventories excluding motor vehicles were flat. The inventory-to-sales ratio thus fell to another record low of 1.26 in July. Retail sales increased 2% in July. The inventory-to-sales ratio in retail fell to 1.40 from 1.46. Sales at manufacturers climbed 0.7% in July, while inventories rose 0.5%. The inventory-to-sales ratio was steady at 1.19. Sales at wholesalers increased 0.5%, while inventories fell 0.1%. The inventory-to-sales ratio dropped slightly to 1.18.