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Inventories Jump 0.6%, Biggest Gain Since May

November 17, 1987|Associated Press

WASHINGTON — Business inventories rose a sharp 0.6% in September, the biggest gain in four months, while business sales rose 1%, the government said Monday.

The Commerce Department said inventories held on shelves and back lots rose to a seasonally adjusted $682.4 billion in September following a more modest 0.1% increase in August. The September gain was the largest advance since a 0.9% rise in May.

Total business sales climbed to $462.1 billion in September after an equally robust 1.1% jump in August.

While the increase in sales outpaced the rise in inventories, economists said they were still worried about whether inventories were rising at such a rapid pace that manufacturers will be forced to slash production plans.

A buildup of unwanted inventories can be a signal of an impending recession. Economists said such an occurrence was even more of a threat with the huge plunge in stock prices in October.

Many analysts are forecasting that the economy will grow only sluggishly as consumers cut spending because of concerns about the future.

Michael Evans, a Washington economic consultant who is forecasting a recession, said the September rise in inventory levels reflected optimism on the part of businesses that the upcoming Christmas sales season would be strong. He said the stock market decline was likely to dash those hopes.

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