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. Sales at U.S. retailers last month fell less than anticipated, a sign households will play a greater role in the emerging economic recovery, another report from the Commerce Department showed today. The 1.5 percent decrease in purchases followed a 2.2 percent gain the prior month. Sales excluding automobiles climbed 0.5 percent, more than the median forecast of economists surveyed by Bloomberg News. Sales Improve The inventory report showed total business sales climbed 1 percent in August after a 0.3 percent gain the prior month. It would take 1.33 months to deplete stockpiles at the current sales pace, the fewest since September 2008. Retailers’ inventories, the only part of today’ report not previously released, dropped 2.3 percent, the most since October 2001, after a 1 percent decrease the prior month. Retail sales, excluding food, rose 2.4 percent. Retail inventories account for a third of all business stockpiles. Factory inventories fell 0.8 percent and wholesale stockpiles dropped 1.3 percent. Total business inventories shrank at a record $160.2 billion annual pace in the second quarter after a $113.9 billion rate the first three months of the year. Auto Stockpiles Today’s report showed auto inventories slumped 7.9 percent, also the most since October 2001, as sales increased 7.8 percent. That pushed the industry’s inventory-to-sales ratio for August down to 1.73 months, down from 2.03 months in July. Even with the expiration of the government’s “cash-for- clunkers auto trade-in program, total consumer spending may rise the rest of this year, though at a slower rate, according to economists surveyed this month by Bloomberg. The government is scheduled to release its first estimate of third-quarter gross domestic product on Oct. 29. Economists surveyed by Bloomberg News earlier this month estimated the economy expanded at a 3.2 percent pace from July through September and will slow to a 2.4 percent rate this quarter. Zappos.com Inc. is boosting inventory of its best-selling brands as it expects consumer spending to pick up in the year- end holiday season. “We think the customer is going to come back and we want to be there to service them,” Fred Mossler, who oversees merchandising at Zappos.com, said in an interview on Sept. 28. “We’re making some bets about some of our best products and brands.” Concern Over Jobs Some consumer companies are less optimistic. Levi Strauss & Co., the closely held maker of blue jeans and Dockers pants, said Oct. 8 that rising unemployment in the global recession cut third-quarter profit and may crimp holiday sales. “While there’s a general feeling that we’re in a better market today than we were six or nine months ago, there’s still just a huge overhang from unemployment,” Chief Financial Officer Blake Jorgensen, 49, said in an interview. “It’s going to be a slow recovery in 2010.” Chief Executive Officer John Anderson told analysts that because retailers are carrying “leaner” inventories it’s hurting demand at manufacturers.

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