P.M. BRIEFING : Inventories Rise as Sales Slip

Business inventories rose 0.2% in September, while business sales dropped 0.3%, the government reported today.

The combination of the accumulation of goods on shelves and backlogs rising faster than sales could be bad news for the economy. If inventories were to pile up excessively, it could mean cutbacks in production and a loss of jobs.

The Commerce Department said inventories climbed to a seasonally adjusted $791.8 billion in September, following a gain of 0.4% in August.

Business sales, meanwhile, dropped to a seasonally adjusted $524.6 billion after advancing 3% in August.

The September business activity produced an increase in the ratio of sales to 1.51, meaning it would take 1.51 months to exhaust inventories at the September pace. The ratio was 1.50 in August.

Retailer backlogs were up 1% in September and could be worse in October. The Commerce Department reported Tuesday that retail sales last month dropped a full 1%, including a 5.1% decline in car sales.