Inventories Rose 0.7% During July; Sales Fell 0.5%
WASHINGTON -- Business inventories rose 0.7% in July while sales fell 0.5%, the Commerce Department reported, another indication that the economy is vulnerable to recession.</br></br>Economists have been watching inventory levels closely, fearing that if stockpiles of unsold goods grow too high, businesses will cut back on orders and production. With the economy barely growing, the chain reaction could lead to a recession.</br></br>July's rise in inventories followed a 0.5% decline in June.</br></br>The figures "are not worrisome in themselves, but taken with other data seen of late they suggest we are dealing with an economy that is fragile," said Robert Dederick, chief economist at Northern Trust Co., Chicago, pointing to recent declines in retail sales and housing starts and an increase in the unemployment rate.</br></br>Aubrey Zaffuto, vice president and economist at IBJ Schroder Bank & Trust Co., New York, predicted there will be a cut in production to offset the growing inventory figures. "People are intolerant of small increases in inventories," she said.