Low 0.4% Increase in Unsold Goods Surprises Analysts

Stockpiles of unsold goods grew a surprisingly small 0.4% in January after a 0.9% increase in December, the government said today.

Economists had expected business inventories to rise about 0.8%. The slower rate suggested firms were succeeding in bringing output back into line with demand after a massive accumulation of unsold goods in the fourth quarter of 1987.

As a result, companies ought not need to cut production sharply in the months ahead, boding well for the economy.

The Commerce Department said U.S. business inventories rose $3 billion during January to $705.85 billion. The 0.9%, or $6.44-billion, rise in December was a revision from the department’s original estimate of 0.8%.

Business sales fell in January by 0.7% after a 1.2% increase in December.