Companies add to inventories for third month in row

WASHINGTON -- For the third straight month, U.S. companies replenished their stockpiles in July, providing a bright spot for the struggling economic recovery.

Supplies of unsold goods on shelves and back lots jumped by 0.4 percent in July from the previous month, lifting the value of inventories to a seasonally adjusted $1.1 trillion, the Commerce Department reported Monday.

Big factors in July's gain: automobile dealers stocked up on cars and trucks to meet consumer demand stoked by free financing and other incentives. Furniture, electronic and appliance stores also added briskly to their inventories.

"Businesses anticipated greater demand so they added to their stockpiles, and that's a good thing for the economy," said Richard Yamarone, economist with Argus Research Corp.

Businesses' sales rose by a strong 1.2 percent in July, the biggest gain in three months.

The three months of inventory rebuilding comes after a more than yearlong effort by businesses to get rid of excess inventory, which had piled up as the economy started to ail and eventually fell into a recession in 2001.