US inventories cast cloud on second-half growth

Washington

EFFORTS by US businesses to whittle down a huge inventory stockpile could weigh on production over the second half of the year and undercut economic growth.

Business inventories have increased by more than US$100 billion in each of the last two quarters, a record back-to-back increase.

The robust restocking has not been matched by strong sales growth, leaving the inventory-to-sales ratio at a near six-year high of 1.37. The ratio is viewed as a good way to measure whether an inventory build-up is unintended. "Either we are ramping up in expectation of much stronger demand and faster sales growth than people presently expect, or we are going to have a right-sizing of this …