P.M. BRIEFING : Business Inventories Climb 0.7% as Sales Advance 1% in January

Business inventories rose 0.7% in January while sales advanced at a strong 1% pace, the government said today.

The Commerce Department said inventories held on shelves and back lots climbed to a seasonally adjusted $766.2 billion in January following a 0.9% increase in December. Meanwhile, business sales rose to a seasonally adjusted $513.9 billion in January, matching the 1% increase a month earlier.

January’s activity produced no change in the ratio of inventories to sales, which stood at 1.49, meaning it would take 1.49 months to exhaust inventories at January’s sales pace.

Rising inventories, if not accompanied by corresponding increases in sales, can lead to production cutbacks that would hamper economic growth. But recent increases in inventories generally have been accompanied by rising sales and most reports for the start of 1989 portray ongoing strength in the economy.