Sales Outpace Inventory Rise

Business sales far outpaced inventory accumulation in August, the government said Monday in a report that one analyst attributed to a mini-inventory correction.

The Commerce Department said inventories edged up 0.3% to a seasonally adjusted $789.9 billion, while sales advanced a steep 3.1% to $526.8 billion. The pace in inventories was down from a 0.9% hike in July, while sales rose from a 0.9% decline the previous month.

The combination of sales advancing far faster than the accumulation of goods on shelves and back lots is good news for the economy. If inventories were to pile up excessively, it could mean cutbacks in production and a loss of jobs.

The Commerce report showed a decrease in the ratio of inventories to sales from 1.54 in July to 1.50 in August. That means it would take 1 1/2 months to exhaust inventories at the August pace.