Washington — Businesses had trouble whittling inventories of unsold goods in January as sales stalled, providing further evidence of the faltering economy.
The Commerce Department reported Wednesday that inventories of goods on shelves and backlots shot up 0.4 percent in January, the biggest rise in three months, to a seasonally adjusted $1.22 trillion. Sales were flat at $896.6 billion.
The bigger-than-expected increase in inventories means companies will keep scaling back production in the face of slumping demand, economists said. The latest inventory figures also suggested that the economy will continue to be sluggish in the coming months, they said.
"The data means a near-term rebound for the economy doesn't seem likely. We'll probably see similar economic weakness over the next three to six months," economist Richard Yamarone said.
Wednesday's report also said that the inventory-to-sales ratio, which measures how long it would take businesses to exhaust their inventories at January's sales pace, rose to 1.37 months. That was the highest since March 1999 when it also stood at 1.37 months.
"Companies are having a difficult time drawing down inventories because of weak sales," said Karen Dexter, a Merrill Lynch economist.
Consumers' and businesses' appetite for goods has flagged as the economy has slowed. To work off inventories and bring them more in line with demand, companies are laying off workers, reducing shifts to curb production and deeply discounting merchandise.
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