business inventories riseBetter-than-expected retail sales prompted businesses to restock shelves and warehouses, as business inventories rose 1% in July -- the largest gain in two years -- the U.S. Commerce Department announced Tuesday.

A Bloomberg survey had expected business inventories to rise 0.6% in July after a 0.3% rise in June. Inventories rose 0.1% and 0.4% in May and April, respectively.

Strong Sales Prompt Restocking

As noted, stronger sales, which rose 0.7%, gave retailers and wholesalers the confidence to replenish those shelves in July. It was a broad-based sales gain, with sales rising in all three categories -- retail, manufacturing, and merchant wholesale.

Sales are now up 9.2% in the past 12 months, compared to July 2009. Although investors should keep in mind that current sales increases stem from a low base as a result of the recession, the year-over-year increase is still a substantial improvement from the double-digit declines recorded during the depths of the recession.

Also, the inventory-to-sales ratio remained steady at 1.26 July. The ratio, an indicator of demand, was at 1.35 a year ago, in July 2009.

Sales, Inventory Gains Ease Double-Dip Concern

July's business inventory report represents another "shot-in-the-arm" for the economic bulls. Business inventory restocking has played a major role in the economic recovery to-date, and slowing commercial activity in the second quarter has prompted some economy watchers to argue that inventory rebuilding would soon taper, due to inadequate sales, resulting in substantially lower U.S. GDP growth -- and possibly the start of a double-dip recession --- in the second half of 2010.

However, the decent sales gain in July should ease concerns that the economic recovery will slow to a crawl in the immediate quarters ahead, and businesses displayed confidence in that firmer sales trend by increasing inventories.

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increasing inventories also is an indicator of slower demand. Watch out for biased media bulshit reporting.

September 15 2010 at 2:14 AM Report abuse rate up rate down Reply

Does the Bloomsburg Survey really know the middle class??? ...what about Sales Tax Hotel Tax School Tax Liquor Tax Luxury Tax Excise Taxes Property Tax Cigarette Tax Medicare Tax Inventory Tax Car Rental Tax Real Estate Tax Well Permit Tax Fuel Permit Tax Inheritance Tax Road Usage Tax CDL license Tax Dog License Tax State Income Tax Food License Tax Vehicle Sales Tax Gross Receipts Tax Social Security Tax Service Charge Tax Fishing License Tax Federal Income Tax Building Permit Tax IRS Interest Charges Hunting License Tax Marriage License Tax Corporate Income Tax Personal Property Tax Accounts Receivable Tax Recreational Vehicle Tax Workers Compensation Tax Watercraft Registration Tax Telephone Usage Charge Tax Telephone Federal Excise Tax Telephone State and Local Tax IRS Penalties (tax on top of tax) State Unemployment Tax (SUTA) Federal Unemployment Tax (FUTA) Telephone Minimum Usage Surcharge Tax Telephone Federal Universal Service FeeTax Gasoline Tax (currently 44.75 cents per gallon) Utility Taxes Vehicle License Registration Tax Telephone Recurring and Nonrecurring Charges Tax Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids. We also were A Common Law Country! I have set up a place that the poor and middle class in the country can start to get some of this tax money back. It is our turn to have a piece of the action. Here is my way to get your loot back. Just google EASY STOCK CASH and click the first link. Once you get there, go right to the PENNY STOCK page to see what the rich don't want you to know.

September 14 2010 at 8:56 PM Report abuse rate up rate down Reply

Yet Another fluff story from the street! A contrived attempt to instill confidence in the little investor so they can get what little dollars you have left ! ....wake up people!

September 14 2010 at 4:21 PM Report abuse rate up rate down Reply

An increase in inventories is a good thing if followed up by an increase in sales. It can also mean that business' were building inventories in anticipation of sales that haven't taken place.

September 14 2010 at 12:32 PM Report abuse +2 rate up rate down Reply