Inventories Increase on Positive Retail Sales

Last month proved to be the strongest period for retailers over the last two years as sales rose 0.8%, up for a 5th consecutive month. Televisions and electronics were high volume items although Best Buy, America's largest electronics chain, posted their quarterly net income below expectations on Tuesday; indicating a loss of market share to competitors. Although November's sales figures were better than economists had expected, many cautioned that the economy will need more hiring and higher pay to sustain such spending gains through 2011.

Increased sales led to higher inventories held by U.S. businesses. This week, the Commerce Department reported business inventories increased 0.7% in October after a revised 1.3% rise in September. Total inventories climbed to $1.42 trillion in November, increasing 7.5% from the low point for stockpiles of $1.32 trillion, as measured in September of 2009. Continued strong gains in inventories and sales are viewed as encouraging signs for the economy.

According to a new survey of CEOs from 137 of America's largest companies, 45% plan to hire within the coming six months -- the highest percentage for that group in eight years. The Business Roundtable survey comes as Congress is on the verge of passing legislation extending the Bush-era tax cuts, lowering payroll taxes, and extending unemployment benefits through the end of 2011. We will keep you posted…