Businesses still slashing inventories

August 12, 2009 at 12:00a.m.

WASHINGTON (AP) — Businesses slashed inventories at the wholesale level for a record 10th consecutive month in June, a decline that has contributed to the longest recession since World War II.

The Commerce Department said Tuesday that wholesale inventories declined 1.7 percent in June, nearly double the 0.9 percent decrease economists had expected.

But in an encouraging sign, sales rose 0.4 percent for a second-straight month, the first back-to-back increases in a year.

The hope is that a rebound in sales will encourage businesses to switch from reducing their stockpiles to building up inventories to meet rising demand. That change would generate rising orders to U.S. factories, helping to support a rebound in the overall economy.