Daya blog

Inventories rise 0.9 percent in September

WASHINGTON – Businesses boosted inventories for a ninth straight month in September while sales rose by the largest amount since July.

Inventories increased 0.9 percent in September while business sales increased 0.5 percent, the Commerce Department reported Monday.

Continued strong gains in inventories and sales are seen as encouraging signs that the economic recovery will continue. Inventory rebuilding has provided critical support as the economy as struggled to emerge from a deep recession.

The 0.9 percent rise in inventories matched the August increase and pushed total inventories to a seasonally adjusted $1.4 trillion in September, the highest level since March 2009.

The increase was led by a 1.5 percent rise in inventories held by wholesalers. Inventories at the retail level rose 0.8 percent while manufacturing inventories increased 0.7 percent.

The 0.5 percent rise in sales in September reflected gains at all levels of the supply chain. In a separate report Monday, the government said that retail sales rose again in October, increasing by 1.2 percent, the best showing since last March.

Increased orders to fill empty store shelves have translated into higher production at the nation's factories.

Many businesses had undertaken a massive liquidation of inventories in early 2009 as they struggled to cope with a deep recession and plunging demand by keeping costs under control.

However, the swing from slashing inventories to rebuilding stockpiles has been a big factor in overall economic growth, starting in the October-December quarter of last year.

The overall economy grew at a modest annual rate of 2 percent in the July-September quarter with a big portion of that growth coming from inventory rebuilding.

The ratio of inventories to sales remained at 1.27 percent in September, the same as August. That means it would take 1.27 months to exhaust deplete existing stockpiles at the September sales pace.