Inventories Dip as Sales Rise in November

WASHINGTON — Business inventories, which had shot up in October, edged down 0.2% in November while total business sales posted a 0.3% increase, the Commerce Department said Thursday.

Private economists said the slight drop in inventories was encouraging, indicating that businesses are succeeding in working down excess stockpiles which had built up the previous month.

In October, inventories climbed 0.6%, the biggest gain in more than two years, as car dealers suffered a big drop in new car sales after cut-rate financing incentives ended.

Analysts expressed concern then that the buildup in inventories would lead to factory production cutbacks that would hamper economic growth in the new year.

‘Encouraging Numbers’

However, economists said that the slight decline in inventories in November, coupled with other information showing that retail sales improved in December, lessened their concerns that an unwanted buildup in inventories would slow economic growth in 1987.

“These numbers are encouraging. They don’t suggest the likelihood of a recession,” said Michael Niemira, an economist for Paine Webber. “I think inventories are getting back into balance.”

The 0.2% drop in inventories left stockpiles on shelves and in back lots at $590.61 billion in November, the Commerce Department said. The decline was led by a 1.8% drop in inventories held by auto dealers, which helped reduce inventories at the retail level by 0.7%.

This decline followed a big 2.8% rise in retail inventories in October, which analysts attributed to a slowdown in car sales and stockpiling by department stores for the Christmas buying season.

Inventories held by wholesalers were also down in November by a smaller 0.3%, while manufacturing inventories edged up 0.2%.