Business Inventories Up 0.9% in December; Sales Jump 0.8%

Business inventories rose 0.9% in December, the biggest increase since August, and sales jumped 0.8% for the fastest gain since October, the government reported today.

The Commerce Department said inventories held on shelves and back lots rose to a seasonally adjusted $760.6 billion, while sales reached $508.2 billion.

December’s 0.9% boost in inventories followed a 0.4% increase in November. It was the 24th straight month in which inventories had risen.

The 0.8% increase in sales followed a 0.4% sales rise for November, as the rates of increase for inventories and sales closely tracked one another.

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

December’s sales gain was the biggest since a 1.3% increase in October. It was pinned to a 2.4% increase at the manufacturing level, which offset a 0.8% drop in sales by wholesalers and a 0.1% drop in retail sales during the crucial holiday shopping season.