Tags: Inventories | US | Companies | Increase | More | Than | Forecast

Business Inventories Rise More Than Forecast

Friday, 15 Oct 2010 10:40 AM

Inventories in the U.S. rose more than forecast in August as companies prepared for improving sales heading into the holiday season.

The 0.6 percent increase followed a revised 1.1 percent rise in July that was larger than previously estimated, the Commerce Department said today in Washington. Sales rose 0.1 percent, led by a 0.7 percent gain at retailers.

Another Commerce Department report today showed demand at retailers climbed again last month, indicating merchants will keep restocking shelves and boosting orders to American manufacturers. Macy’s Inc. is among stores that are careful to add to stockpiles so as not to outpace demand in an economy that has been slow to accelerate.

“Businesses remain cautious, but they are not retrenching,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The inventory contribution may be fading more slowly, a positive for near-term growth.”

Economists forecast inventories would rise 0.5 percent, according to the median of 50 projections in a Bloomberg News survey. Estimates ranged from no change to a gain of 0.7 percent. July’s gain in stockpiles was previously estimated at 1 percent.

Other reports today showed retail sales climbed more than forecast in September, inflation cooled even further and manufacturing in the New York region accelerated this month.

Sales Increase

Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated, Commerce Department figures showed.

The cost of living rose 0.1 percent in September, less than forecast, showing companies are finding it difficult to raise prices, figures from the Labor Department showed today. Core prices, which exclude food and fuel costs, rose 0.8 percent in the past 12 months, the smallest year-over-year gain since 1961.

The Fed Bank of New York’s general economic index rose to 15.7 in October, the highest level in four months and more than twice the median forecast of economists surveyed by Bloomberg. Readings greater than zero signal gains in the so-called Empire State Index covering New York, northern New Jersey and southern Connecticut.

Retailers’ inventories, the only part of today’s report not previously released, increased 1 percent in August for a second month. Auto dealers and furniture and appliance stores led the advance.

Factories, Wholesalers

Factory inventories rose 0.1 percent and wholesale stockpiles increased 0.8 percent. Sales at manufacturers dropped 0.6 percent and those at wholesalers grew 0.5 percent.

Stores such as Gap Inc. are using promotions to drive sales gains that are being limited by unemployment near a 26-year high. Employers cut more jobs last month than forecast, underscoring concern among some Federal Reserve officials that the economy may require a boost from easier monetary policy.

The amount of goods on hand to meet demand in August increased to 1.27 months from 1.26 in July.

The world’s largest economy grew at a 1.7 percent annual pace in the second quarter, down from a 3.7 percent gain in the first three months of the year, according to figures from the Commerce Department last month. Gains in inventories contributed 0.82 percentage point to growth after a 2.64 point contribution in the first three months of the year.

A surge in manufacturing to replenish depleted stockpiles helped the economy recover from the recession.

Carmakers are among companies still building inventories as demand picks up. Vehicle purchases last month accelerated, with deliveries at General Motors Co. climbing 11 percent from a year earlier to 173,155. Ford Motor Co., the second largest U.S. carmaker behind GM, boosted sales by 41 percent to 160,873 sales.

GM’s inventories were up 22 percent at 478,0000 units in September from a year earlier, Donald Johnson, vice president of North America sales, told a teleconference on Oct. 1.

“Overall, we think that’s a pretty healthy figure,” said Johnson. “We can definitely use some more” for some models.

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Inventories in the U.S. rose more than forecast in August as companies prepared for improving sales heading into the holiday season.The 0.6 percent increase followed a revised 1.1 percent rise in July that was larger than previously estimated, the Commerce Department said...
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Friday, 15 Oct 2010 10:40 AM
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