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Business Inventories Rise 0.4 Percent, in Line With Expectations

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U.S. businesses added to their stockpiles in October while sales fell, a sign that companies may order fewer goods in the coming months.

The Commerce Department said inventories rose 0.4 percent, down from a 0.7 percent increase in September and the smallest gain in four months. Sales, meanwhile, dropped 0.4 percent.

Rising inventories and falling sales suggest that companies may have ordered more goods than they need. As a result, they are likely to cut back on orders in the coming months, which would slow factory output and economic growth.

A ratio of inventories to sales rose to its highest level in three years in October. That also indicates that companies may have restocked too much. A big increase in stockpiles accelerated economic growth in the July-September quarter.

Business inventories rose in line with what analysts had been expecting according to a consensus estimate from Reuters.

(Click here to see how U.S. stocks are trading following the report.)

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