August 15, 2009
Inventories held by U.S. businesses on shelves and backlots fell for the tenth straight month in June, the longest stretch in seven years, the Commerce Department reported Thursday.
U.S. business inventories declined by 1.1 percent in June, slightly larger than the 0.9 percent drop economists expected.
According to data released by the department, the June weakness in inventories was led by a decrease of 1.7 percent in stockpiles held by wholesalers. Meanwhile, manufacturers' inventories declined 0.8 percent in June.
But business sales at all levels rose 0.9 percent in June, the first increase in nearly a year.
The total business inventories-to-sales ratio at the end of June was down to 1.38 from 1.41 in May. The ratio is a measure of how long it would take to deplete stocks at the current sales pace.
Usually, falling inventories are seen as a sign of lack of confidence in future demand or as a result of an unexpected increase in sales. Analysts look at the inventories-to-sales ratio to determine how to interpret the data.
The longest stretch in seven years of declines in business inventories came as companies struggled to cope with the prolonged recession, which started in December 2007.