U.S. Business Inventories Fell 1.5% in August, Most This Year

[Purveyor]

By Courtney Schlisserman

Oct. 14 (Bloomberg) -- Inventories at U.S. businesses fell more than forecast in August as sales climbed, helping put firms in a position to increase orders in coming months.

The 1.5 percent decrease in stockpiles, the biggest so far this year, brought the value of goods on hand down to $1.31 trillion, the fewest since December 2005, figures from the Commerce Department showed today in Washington. A plunge at auto dealers led the decrease as the “cars-for-clunkers” plan revived sales.

Companies probably will pickup production and spending after drawing down stockpiles at a record pace in the first half of the year. That may give the U.S. economy, the world’s largest, a boost in coming quarters as it tries to emerge from the worst recession in seven decades.

“Firms are still managing inventories cautiously,” Michael Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report.

Economists forecast inventories would decline at a 1 percent rate, according to the median of 49 projections in a Bloomberg News survey. Estimates ranged from declines of 0.5 percent to 1.3 percent.

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601068&sid=agOh6TPpl_j0

[dmallind]

1. And another domino falls

As inventories decline, eventually production and raw material purchasing begin to increase. Inevitably, this leads to more spending and more employment. Companies certainly are being cautious, but eventually the most cautious still have to shit or get off the pot.

But doubtless some will try to tell us it's all a capitalist plot by evil "corporatists" to make sure the companies have nothing to steal when they are looted during the upcoming revolution......

[Purveyor]

2. I am finally seeing some life in the help wanted section of the local mid-michigan papers.

Also, compared to last year my pet related product sales are up over 30%.

Granted most of my products are priced at less than $10 dollars but I'm sensing in the people that they are tired of scrimping and not buying anything fun and discretionary.

Unless we have another major shock to the financial markets, I predict it will be a 'better than forecast' holiday shopping season.