U.S. August business inventories rise 0.1 pct

WASHINGTON, Oct 12 (Reuters) - U.S. business inventories rose a smaller-than-expected 0.1 percent in August while sales of goods dropped 0.4 percent, the government said on Friday.

Total business inventories at manufacturers, wholesalers and retailers rose in August to a seasonally adjusted $1.42 trillion after an unrevised 0.5 percent gain in July, the Commerce Department said.

The rise in unsold stocks was smaller than the 0.2 percent gain forecast by economists in a Reuters poll.

The August inventory advance was partly driven by increases at auto dealers and food and beverage stores.

Business sales in August fell to $1.12 trillion after an unrevised 1.1 percent July gain.

The inventories-to-sales ratio, which measures how long it would take to clear out inventories at the current sales pace, rose to 1.27 months from 1.26 months in July.

Business inventories are also a component of gross domestic product. The smaller-than-expected August inventory may prompt economists to revise estimates for third-quarter growth. The Commerce Department is set to release its third-quarter GDP report on Oct. 31.