AlQa'dah 7, 1434, Sep 13, 2013, SPA -- U.S. business inventories posted their biggest increase in six months in July, as sales grew, the government reported Friday, suggesting that restocking could help third-quarter economic growth. The Commerce Department said business inventories rose 0.4 percent in July to $1.66 trillion, following a 0.1 percent gain the previous month. Total business sales rose 0.6 percent after increasing 0.2 percent in June. Retail inventories grew 0.8 percent in July, manufacturing inventories rose 0.2 percent, and wholesale inventories increased 0.1 percent. Manufacturers account for about 40 percent of business inventories, retailers about one-third, and wholesalers about one-quarter. Inventories are a key component of gross domestic product (GDP) changes. They added 0.6 percentage point to the second quarter's 2.5 percent growth pace. Businesses have been wary of restocking after consumer spending slowed in the April-June quarter, but they appear to be stocking up for the year-end holiday season. Rising inventories are a good sign for the economy because they suggest companies expect greater sales. More inventory building also means businesses ordered more goods, therefore increasing factory production and economic growth. Higher sales mean that companies are less likely to be holding excess goods.
