Wholesale inventories fall, sales rise

Good economic news from August is likely to be changed by attacks

October 11, 2001|By BLOOMBERG NEWS

WASHINGTON - U.S. wholesale inventories fell for a third consecutive month in August and sales rose, according to government figures that suggest companies had made progress clearing warehouses before Sept. 11.

Stockpiles declined 0.1 percent in August to $298.7 billion, the lowest since June 2000, the Commerce Department said yesterday. Inventories had fallen 0.9 percent in July. Sales increased for a second consecutive month, led by drugs and petroleum products.

The sales rise may not be found to have repeated itself in September, when terrorist destruction in New York and Washington halted business, prompted job cuts and sapped consumer confidence. As a result, many distributors probably will hesitate to build stockpiles. Some already were trimming supplies, reflecting growth at an eight-year low in the second quarter.

The latest economic picture helped Wall Street gain yesterday. The Dow Jones industrial average climbed 188.42 to 9,240.86 and the Nasdaq composite index advanced 56.06 to 1,626.26.

U.S. retailers' sales last month probably showed the smallest gain in at least three decades, analysts said on the eve of company reports. Bank of Tokyo-Mitsubishi Ltd., which tracks about 80 U.S. retailers, reduced its forecast to show sales rose no more than 1 percent from a year earlier. The bank was expecting a 3 percent rise before the deadly attacks.

Businesses pared inventories by $38.3 billion in the second quarter, the largest drop since the first quarter of 1983. That helped limit economic growth in the quarter to 0.3 percent at an annual rate, the slowest since the first quarter of 1993.

The last time August that wholesale inventories have declined for three straight months was in 1991, when the country was emerging from the last recession.

The Sept. 11 attacks with hijacked commercial airliners may have helped tip the country into recession. The economy probably shrank at a 0.5 percent annual rate in the third quarter and is likely to contract at a 1 percent pace in the fourth, according to a survey.

Wholesaler sales rose 0.6 percent in August, surprising analysts who had expected a 0.3 percent decline. Wholesaler sales had risen 0.7 percent in July, stronger than the previously reported gain of 0.6 percent.

That pushed down the inventory-to-sales ratio, a measure of the time goods sit unsold, to 1.30 months, the lowest since February. The ratio had dropped to 1.31 months in July.

Analysts had expected wholesale inventories to drop 0.3 percent in August after a previously reported decline of 0.7 percent a month earlier.

Factory inventories fell 0.7 percent in August, the seventh straight decline, the Commerce Department reported last week. Retail inventories are to be reported next week.

Wholesaler inventories of durable goods fell 0.7 percent in August, led by decreases for automobiles and parts, electrical goods and furniture. That follows a 1 percent decline in July.

Wholesaler sales of durable goods rose 0.4 percent after rising 0.2 percent the previous month. The August sales increase was led by automobiles and parts, hardware and machinery.

Inventories of nondurable goods rose 0.9 percent, led by drugs, after falling 0.8 percent in July. Sales of nondurable goods rose 0.8 percent in August, led by apparel, drugs and petroleum products, after rising 1.2 percent in July.

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