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U.S. inventories fall
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October 10, 2001: 11:20 a.m. ET
The beleaguered manufacturing sector may have been poised for a rebound.
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NEW YORK (CNNmoney) - Wholesale inventories in the United States shrank in August, the government reported Wednesday, indicating the beleaguered manufacturing sector may have been poised for a rebound before the Sept. 11 terrorist attacks on New York and Washington.
Inventories fell 0.1 percent in August to $298.68 billion after a revised 0.9 percent drop in July, the Commerce Department reported. Economists surveyed by Briefing.com expected inventories to fall by 0.3 percent.
Meanwhile, wholesale sales rose 0.6 percent to $229.31 billion following a 0.7 percent rise in July.
The closely watched stock-to-sales ratio, which measures how long it would take to deplete current inventories, slipped to 1.30 months in August from 1.31 in July.
Inventory overhang has been a symptom of a slowdown in the U.S. economy and a recession in the manufacturing sector lasting more than a year. Sluggish spending by businesses on new equipment left goods sitting on manufacturers' shelves, forcing them to scale back production and cut hundreds of thousands of jobs.
The industry may have been poised for a rebound in the days before Sept. 11, but the attacks that destroyed New York's World Trade Center and damaged the Pentagon led most economists to expect the economy would worsen.
To keep consumers, who fuel two-thirds of the U.S. economy, spending and avoid a sharp downturn, the Federal Reserve has cut interest rates nine times this year -- twice since the attacks -- to make borrowing easier.
Analysts don't expect the rate cuts to have an impact on business spending because businesses won't borrow to spend more until they know demand will increase for the products they make. The rate cuts are expected to lift consumer confidence, however. President Bush and Congress are studying other possible ways to keep consumers happy, including tax cuts.
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Inventories of durable goods like cars and furniture fell a steep 0.7 percent in August after plunging 1 percent in July.
Within the durables category, inventories of professional equipment rose 0.1 percent in August but computer equipment stocks were down 0.8 percent. Lumber inventories shot up 2.0 percent while cars were down 1.5 percent.
Stocks of non-durable items, such as paper and clothing, rose 0.9 percent after a 0.8 percent drop in July. 
- from staff and wire reports
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