COMMERCE DEPARTMENT Report: Businesses' inventories rose in September

Economists hope a boost in business inventories will push the economy forward.
WASHINGTON (AP) -- America's businesses -- which have been keeping supplies fairly lean -- boosted their stockpiles of unsold goods in September for the first time in six months, a sign that companies may be feeling more confident about the economic recovery's staying power.
The Commerce Department reported today that businesses' inventories rose by 0.3 percent in September, a turnaround from the 0.4 percent drop reported in August. September's rise was the first since March, when businesses also increased their supplies at warehouses and back lots by 0.3 percent.
Economists were expecting inventories to be flat in September.
In another encouraging sign, the increase in inventories in September came even as businesses' sales rose by a solid 0.6 percent, the biggest gain since July. That marked an improvement over the 0.3 percent decline registered in August.
With the economy improving, economists are hopeful that businesses will feel more certain about the sustainability of the economic resurgence and will ramp up inventories, a development that would boost economic growth.
Lasting recovery
After a long capital investment drought, businesses are slowly increasing spending and adding jobs -- two crucial ingredients that must continue for the economic recovery to be lasting, economists say.
Near rock-bottom, short-term interest rates, along with President Bush's third tax cut, helped give the economy a big boost during the summer.
The Federal Reserve is expected to hold its main short-term interest rate at a 45-year low of 1 percent at its last meeting of the year in December, as well as into part of 2004, economists predict. Holding short-term rates at such low levels might motivate consumers and businesses to spend and invest more, something that would lift economic growth.
In September, wholesalers boosted inventories by 0.4 percent, and sales rose by 0.5 percent. Retailers increased inventories by 1 percent as sales dipped by 0.3 percent. At factories, inventories dropped by 0.4 percent as sales jumped by 1.4 percent.
The economy grew at a breakneck rate of 7.2 percent in the third quarter, the best performance in nearly two decades. Economists believe the economy slowed to a rate of about 4 percent in the current quarter, a still-healthy pace.