Business Inventories, Sales Up 0.4% in Nov.

Business inventories rose 0.4% in November and sales rose at the same pace, the government said today in a report that analysts said bodes well for the nation’s economy in the new year.

The Commerce Department said inventories held on shelves and back lots rose to a seasonally adjusted $753.6 billion in November, while sales reached $503.8 billion.

The matching 0.4% gains kept the ratio of inventories to sales at 1.50, meaning it would take a month and a half to exhaust inventories at the November sales pace.

When not accompanied by increasing sales, rising inventories can signal economic weakness because they may lead manufacturers to order production cuts and layoffs while they sell off reserve goods.

But John Hagens of Wefa Group in Bala Cynwyd, Pa., said the new report indicates that “at least from the inventories point of view, we think the economy is in pretty good shape for continued growth in 1989.”

“Oftentimes, before a recession, inventories tend to build up,” he said. “There’s no evidence of any kind of excesses in inventories in the economy.”

Follows Earlier Rise

The November increase in inventories followed a minuscule rise during October and a 0.9% jump in September. It was the 23rd straight month in which inventories had risen, but sales generally have kept pace.

The monthly increase in sales was down from a 1.3% increase in October and virtually unchanged sales activity in September.