Business Inventories Rise as Sales Surge

U.S. business inventories rose less than expected in October as sales increased at their fastest pace in seven months, a government report showed on Tuesday.

The Commerce Department said inventories rose 0.7% to $1.42 trillion, the highest level since February 2009, after increasing by an upwardly revised 1.3% in September.

Economists polled by Reuters had forecast inventories rising 1% after a previously reported 0.9% increase in September.

Inventories are a key component of gross domestic product changes and have been a key driver of growth as the economy recovers from the worst downturn since the Great Depression of the 1930s.

But the rate of inventory accumulation is expected to slow somewhat in the quarters ahead and make a limited contribution to GDP growth.

Business sales increased by 1.4% to $1.12 trillion in October, the highest level since September 2008, after rising 0.8% the prior month. The percentage increase in sales last month was the largest since March.

The sales pace left the inventory-to-sales-ratio, which measures how long it would take to clear shelves at the current sales pace, at 1.27 months from 1.28 months in September.