WASHINGTON, Sept 9, (AP): US wholesale businesses boosted their stockpiles for a 19th consecutive month in July, but their sales were flat. Faltering demand could force businesses to cut back on orders when the economy is at risk of another recession.
The Commerce Department said Friday that wholesale inventories rose 0.8 percent in July. Sales were unchanged, the poorest showing since a 0.3 percent drop in May.
Weakening sales could shake business confidence and cause them to cut back on their restocking. Still, economists say sales will rebound in coming months as the economy mounts a modest recovery from extremely weak growth in the first half of this year.
In July, the ratio of inventories to sales increased slightly to 1.17 from 1.16 in June. That means it would take 1.17 months to exhaust the current level of stockpiles. That ratio is very close to the record low of 1.13 hit in March.

Leaner stockpiles typically suggest wholesalers will boost factory orders in the months ahead. But that is largely dependent on sales.
The economy expanded at an annual rate of just 0.7 percent in the first six months of the year, the slowest growth since the recession officially ended two years ago. Employers did not add any net new jobs in August. Slower growth and poor hiring have raised concerns that the economy could fall back into a recession.
US manufacturing has been one of the strongest sectors of the economy since the recession ended. Efforts by businesses to restock depleted shelves have fueled much of that factory production.
But factory activity weakened in the spring, in part because of supply chain disruptions caused by the Japan crisis. As a result, US manufacturers have had a difficult time getting component parts, particularly for autos and electronics.
Auto production and sales increased this summer, a sign that those disruptions may be easing.
Still, the Federal Reserve last month said it expects the economy will stay weak for the next two years. As a result, it said it planned to keep interest rates at super-low levels for at least through mid-2013.
The Fed next meets on Sept 20-21. Federal Reserve Chairman Ben Bernanke said in a speech Thursday that policymakers will consider a range of options to support the economy at that meeting which was expanded from one to two days to provide more discussion time.

Increase
Some economists expect the Fed will increase the percentage of long-term Treasury securities it holds as a way to exert further downward pressure on long-term interest rates.
Meanwhile, US Federal Reserve Chairman Ben Bernanke said Thursday that he’s surprised by how cautious consumers remain more than two years since the recession officially ended. But he offered no hints of further steps the Fed might take to try to boost the weak economy.
Bernanke noted that several factors have kept consumers from spending more: from high unemployment and falling home values to still-heavy debt loads and higher gasoline prices.
“Even taking into account the many financial pressures they face, households seem exceptionally cautious,” Bernanke said in a speech in Minneapolis to the Economic Club of Minnesota.
Bernanke said that higher prices for gas, cars and other consumer goods were due, in part, to temporary factors, such as supply disruptions stemming from Japan’s earthquake and nuclear crisis. As those factors continue to ease, the Fed chief said he expects inflation to moderate in the coming months.
He reiterated that the Fed will consider a range of options at its next policy meeting Sept 20-21. Some economists have said the Fed must take further steps to drive down long-term interest rates and help the economy avoid another recession.
Bernanke’s remarks Thursday were similar to those he made last month in a speech in Jackson Hole, Wyoming. As he did in that speech, Bernanke said he supported Congress’ push to reduce budget deficits over the long run. But he cautioned against cutting spending excessively while the economy remains so weak.
Congress, he said, “should not ... disregard the fragility of the economic recovery.”

The economy barely grew in the first half of the year: It expanded at an annual rate of just 0.7 percent. And the government said last week that employers added zero net jobs in August.
Consumers and businesses are feeling less confident after a tumultuous summer. Lawmakers fought to the last hours over raising the federal borrowing limit, Standard & Poor’s downgraded long-term US debt and stocks gyrated wildly after plunging in late-July and early August.
On Aug 9, the Federal Reserve said it planned to keep short-term rates at record lows until at least mid-2013, assuming the economy remained weak. Minutes from that meeting showed that some Fed officials pushed for more aggressive steps to try to help the economy.
One possibility is for the Fed to increase the percentage of long-term Treasury securities in the mix of securities it holds. That approach would have the advantage of exerting further downward pressure on long-term rates without swelling the Fed’s already record-level of securities holdings.
Still, three regional bank presidents dissented from the Aug 9 decision. They had expressed concerns that the Fed’s policies were contributing to higher inflation.

The worsening jobs outlook has also put pressure on President Barack Obama. He was expected Thursday night to introduce a $300 billion jobs package before a joint session of Congress. The plan will likely include extensions of the Social Security tax cut and long-term unemployment benefits, tax incentives for businesses that hire and money for public works projects.
But the effort faces opposition from congressional Republicans, who say that Obama’s previous stimulus program was a failure. They want deeper spending cuts to fight the government’s soaring budget deficits.