Inventories Continue Climbing

Businesses boosted their stockpiles of goods on shelves and backlots moderately in January. But with sales climbing at an even faster rate, supplies fell to their leanest level on record.

The Commerce Department said Wednesday that business inventories rose by 0.5 percent in January to a seasonally adjusted $1.15 trillion, slightly stronger than the 0.4 percent rise many analysts were predicting. That matched the gain in inventories posted in December.

It was the 13th straight month in which businesses added to their inventories.

At the same time, sales grew by 0.8 percent to $876.6 billion, following a sizzling 1.2 percent rise in December.

January's sales increase brought the inventory-to-sales ratio to a record low of 1.31, meaning it would take 1.31 months to exhaust inventories at the January sales pace -further evidence of a booming economy.

The Federal Reserve has bumped up interest rates four times since June to slow the economy and keep inflation under control.

Even though those higher rates raised borrowing costs for businesses and consumers, many analysts still believe the economy is growing at a too-rapid pace that probably can't be sustained without triggering inflation. In the last three months of 1999, the economy grew at a sizzling 6.9 percent annual rate.

Given that and the outlook for continuing robust economic growth, most economists predict Fed policy makers will boost interest rates for a fifth time at their meeting next week.

In January, the biggest inventories gains were posted by wholesalers. They saw inventories rise by 0.7 percent to $306.7 billion. That followed a 0.4 percent increase in December.

Retailers boosted their inventories by 0.5 percent to $371.8 billion in January, following a 1.2 percent rise the month before. At factories, inventories grew by 0.3 percent to $471.9 billion following a slim 0.1 percent gain.

On the sales front, factories posted the biggest gain with sales rising a sizable 1 percent to $371.7 billion following a solid 0.8 percent gain in December.

At wholesalers, sales rose 0.8 percent to $242.1 billion, following a 1.2 percent jump the month before. And at retailers, sales rose 0.4 percent to $262.8 billion after a torrid 1.9 percent increase.

By Jeannine Aversa;