August 12, 2006	Saturday	Rajab 16, 1427

WASHINGTON, Aug 11: U.S. business inventories rose a greater-than-expected 0.8 per cent in June on the back of ample supplies of motor vehicles and parts, a government report showed on Friday.

Business sales at retailers, wholesalers and manufacturers rose 0.2 per cent in June to $1.062 trillion, the Commerce Department said.

Financial markets had looked for a 0.5 per cent rise in inventories in June. The May inventory rise was revised to 1.1 per cent from the 0.8 per cent initially reported.

Retail inventories climbed 0.9 per cent in June, while retail sales fell 0.4 per cent.

Rising inventories can either be a signal of business confidence in future demand, or the result of an unexpected decline in sales, causing involuntary stock building.

The ratio of inventories to sales can help show which of these interpretations is correct.

This key measure of how long it would take to deplete stocks at the current sales rate rose to 1.26 months from 1.25 months in May.

Stocks of motor vehicles and parts rose 1.7pc while automotive sales fell 2.5pc, moving this sector's inventories-to-sales ratio to 2.24 months from 2.15 in May.

Manufacturers' inventories rose 0.8 per cent while their sales dropped 0.3 per cent. Wholesale inventories gained 0.8pc, while sales rose 1.4 per cent.—Reuters