Inventories at U.S. factories increased for the first time in more than a year in October, while factory orders also rose an unexpected 0.6 percent, the Commerce Department said on Friday, in signs the manufacturing sector is returning to health.
Analysts polled by Reuters had expected orders to remain unchanged in October. September's rise in orders was also revised up to1.6 percent from the 0.9 percent originally reported.
Factory stocks grew 0.4 percent in October, after shrinking for 13 straight months, the department said. The inventories-to-shipment ratio, a measure of how long it would take to deplete current stocks, declined to 1.34 months' worth from 1.35 months' as shipments rose.
The growth in supply shows that factories are ramping up production as the U.S. economy begins growing again after its longest and deepest recession in decades.
Inventories, though, of durable goods dropped 0.1 percent, led by a decrease in machinery. It was the 10th month in a row that stocks of big ticket items dropped. Orders for durable goods also dropped, by 0.6 percent, in the second decrease in three months.
(Reporting by Lisa Lambert, Editing by Andrea Ricci)