Saturday, August 14, 2010

Business Inventories Up 0.3 Percent In June


Inventories held by businesses rose for a sixth straight month in June but sales declined for a second month in a row.

Inventories increased 0.3 percent in June, the Commerce Department reported Friday. But sales fell 0.6 percent following an even larger 1.2 percent sales decline in May.

The weakness in sales raises concerns about whether companies will continue boosting inventories. Inventory rebuilding had been an important source of strength driving the economic rebound.

Businesses had been rebuilding their inventories in recent months after slashing them aggressively during the recession. But if consumer demand weakens further, businesses could start cutting back. That would mean fewer orders to U.S. factories and weaker output for manufacturers.

The consecutive declines in sales in May and June followed 13 straight increases in total business sales. The June decrease reflected less demand for manufacturers, wholesalers and retailers. A separate report Friday showed that sales at the retail level rebounded in July but the strength was concentrated in higher demand for autos and gasoline.

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