Inventory Growth Rate Slows

Business inventories in July rose at the slowest rate in 11 months, the government said today, suggesting to analysts that underlying economic growth remains strong despite a pause in business sales.

The Commerce Department said inventories rose 0.3% to a seasonally adjusted $733.7 billion. It was the 19th consecutive gain, but the smallest since a 0.2% increase in August, 1987. Economists sometimes take rising inventories as a sign of weakness, fearing that too many goods piling up on shelves and back lots will trigger production cutbacks and layoffs at factories. However, they point out that the buildup over the last year and a half has been accompanied by strong sales, despite a dip in July.