Business Sales, Inventories Rise Slightly in Aug.

U.S. business inventories increased 0.5% in August while sales advanced 2.1% during the month, the Commerce Department announced today.

Huge inventories are usually a sign of hard times ahead, but businesses seem to be keeping their stockpiles of unsold goods under control.

“We are not heading toward a major inventory correction that would lead the economy into recession,” said Norman Robertson, chief economist at Mellon Bank in Pittsburgh. “Businesses are better able to keep a firm hand on their inventories.”

In July, inventories climbed 0.7% and sales dipped 0.4%, according to the data compiled by the department’s Census Bureau.

Inventories totaled $806.48 billion in August against $802.15 billion in July, and sales totaled $551.86 billion in August against $540.37 billion in July, adjusted for seasonal factors.

The Commerce Department also said in its monthly report that the inventory-to-sales ratio, which tracks product delivery time, slipped to 1.46 in August from 1.48 in July.

Retailers’ inventories scored the biggest gain in August, a 1.3% jump, hinting perhaps that consumers were more conservative with their money after Iraq’s invasion of oil-rich Kuwait early in the month.

“Consumers are becoming cautious about spending,” said Cynthia Latta, an economist at DRI/McGraw-Hill in Lexington, Mass. “By the time they fill up their gas tanks to go to the mall, they don’t have enough money to spend at the mall.”