U.S. business inventories grew in September

U.S. business inventories grew at a faster-than-expected pace of 0.5 percent in September, government data showed Wednesday, but remained at historically lean levels.

Meanwhile, sales at retailers, wholesalers and manufacturers increased 0.6 percent to $1.022 trillion, the Commerce Department said.

Wall Street analysts polled by Reuters had forecast a 0.3 percent rise in inventories compared with the 0.4 percent gain recorded in August.

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Rising inventories can either be a signal of business confidence in future demand, or the result of an unexpected decline in sales which caused involuntary stock building. It is the ratio of inventories to sales that shows which of these interpretations is correct.

This key measure of how long it would take to deplete stocks at the current sales rate fell to a record low of 1.25 months in September, compared with 1.26 months in August.

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At a more detailed level within the report, retail inventories rose 0.9 percent in September while retail sales advanced 0.2 percent. Inventories at motor vehicle and parts dealers swelled 2.1 percent, the largest gain since June 2004 when they grew 2.4 percent.

America’s auto industry has suffered sharp swings in demand as car makers used deep discounts to boost purchases over the summer, only to see sales fade as these inducements were reduced. The motor sales-to-inventories ratio widened slightly to 2.03 months from 1.92 months in August.