August wholesale inventories up, sales drop

WASHINGTON (Reuters) - Inventories at U.S. wholesalers rose 0.8 percent in August, higher than what analysts had expected, while sales suffered their largest drop in more than a year and a half, a Commerce Department report showed on Thursday.

Wall Street analysts polled by Reuters had expected inventories to gain by only 0.5 percent, compared with a 1.5 percent rise in July that was previously reported as 1.4 percent.

Sales fell 1.0 percent after dropping 0.8 percent in July, which was originally reported as a much smaller decline of 0.3 percent. The last time they saw such a large drop was January 2007, when they fell 1.4 percent.

Plummeting sales and swelling inventories pushed up the inventories-to-sales ratio, a measure of how long it would take to sell stocks at the current sales pace, to 1.10 months' worth from 1.08 months' in July.

Sales of nondurable goods, which make up more than half of wholesale sales, fell 0.6 percent in the month. Petroleum was the biggest drag on the category, with a 2.0 percent decline.

Durable goods sales dropped 1.5 percent in August, after falling 0.2 percent in July. Durable goods inventories, though, rose 1.4 percent.

(Reporting by Lisa Lambert, Editing by Chizu Nomiyama)