Wed, Jan 17, 2001 - Page 17 News List

Stockpiles of unsold goods piling up at US businesses


Stockpiles of unsold goods at US businesses piled up in November as sales declined for a second straight month, US government figures showed yesterday.

Inventories rose 0.5 percent for the month after rising a revised 0.7 percent in October, according to the commerce department. Sales fell 0.3 percent after declining 0.5 percent the previous month. The last time sales fell for consecutive months was July to August 1998, commerce officials said.

Sluggish sales suggest slower orders and production in coming months as businesses sell from stockpiles that have accumulated over the last half year.

The inventory "accumulation is across the board and a good deal of it is involuntary," said William Sullivan, an economist at Morgan Stanley Dean Witter in New York. "There's going to be some sharp declines in production."

The inventory-to-sales ratio, which measures the time goods sit at businesses, rose to 1.36 months in November, the highest since April 1999, commerce officials said. In October, the ratio was 1.35 months.

The increase in inventories will keep fourth-quarter economic growth from "falling much below 1.5 percent to 2 percent, but raises the possibility of a negative first quarter" as manufacturers cut back on production in response to falling demand, said Chris Low, chief economist at First Tennessee Capital Markets in New York.

Before the report, analysts expected a 0.5 percent increase in business inventories in November following the initially reported increase of 0.6 percent in October, according to a Bloomberg News survey of investment firms.

Retail inventories rose 0.5 percent in November after rising 0.9 percent in October, reflecting larger stockpiles of autos, furniture and building materials.

Retail sales fell 0.5 percent in November after declining 0.1 percent in October.

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