Oct. 10 (Bloomberg) -- Inventories at U.S. wholesalers rose more than forecast in August as companies made sure they had enough goods to meet demand, a government report showed today.

The 1.1 percent increase was the biggest since April and followed a 0.9 percent gain a month earlier, the Commerce Department said in Washington. Sales at wholesalers also rose 1.1 percent in August after a 0.5 percent gain.

The amount of goods sitting in warehouses stayed at a record- low at the current sales rate, pointing to steady gains in production that will help keep the economy from faltering. Slower economic growth is making companies wary of letting inventories grow much faster than sales.

``Businesses feel fairly confident that with inventories at these levels, they can do some rebuilding,'' Tim Rogers, chief economist at Briefing.com in Boston, said before the report. ``Manufacturing will be one of the stronger sectors this year and next.''

Economists expected inventories to rise 0.7 percent, according to the median of 33 forecasts in a Bloomberg News survey. Estimates ranged from gains of 0.3 percent to 0.9 percent.

Wholesalers account for about one-fourth of all business inventories. The Commerce Department reported last week that factory inventories rose 0.4 percent in August, half as much as the month before.

Companies added to stockpiles at an annual rate of $53.7 billion in the second quarter following a $41.2 billion pace in the first three months of the year. Inventories added 0.44 percentage point to gross domestic product in the second quarter.

Growth Forecast

With forecasts for economic growth to slow to an average annual rate of 2.7 percent in the second half from 4.1 percent in the first six months, companies will be deliberate in building up inventories, economists said.

The inventory-to-sales ratio, which measures how long inventories would last at the current sales pace, stayed at 1.15 months in August, today's report showed.

The value of U.S. wholesale inventories in August rose to $386.6 billion from $382.4 billion a month earlier. Sales increased to $335.6 billion.

Stockpiles of durable goods to wholesalers, including cars and computers, increased 0.9 percent for a second month in August. Sales of such goods, meant to last several years, jumped 1.4 percent, the most since May.

Inventories of machinery, professional equipment and electrical goods increased in August. Sales of machines, electrical equipment and imported automobiles rose during the month.

Non-Durable Goods

Non-durable goods inventories increased 1.5 percent after a 0.8 percent rise. Sales of such goods were up 0.9 percent in August.

Lower oil prices limited the increase in the value of stockpiles and of sales. The average price of a barrel of crude oil traded on the New York Mercantile Exchange was $73.08 in August, down from $74.44 in July. Prices have since fallen further.

The value of wholesale petroleum inventories fell 6.5 percent to $10.2 billion in August, after falling 0.6 percent in July, according to today's report. Petroleum sales dropped 1.6 percent after a 1.5 percent rise a month earlier.

Automakers are among companies slashing production to clear out inventory after a recent sales slowdown.

DaimlerChrysler AG Chief Executive Officer Dieter Zetsche said on Sept. 19 that Chrysler would cut second-half production as much as 17 percent after a decline in U.S. sales through August. He acknowledged that company executives had been too optimistic that price discounts could clear excess inventory.

Tractor Sales

Duluth, Georgia-based Agco Corp., the second-largest U.S. maker of tractors and combines, said third-quarter sales fell about 6 percent as demand in North America and Asia faltered, the company said Oct. 6.

``Costs have caused farmers and dealers to be more cautious in terms of inventory,'' Agco spokesman Greg Peterson said in a telephone interview Oct. 6.

Paul Ballew, general director of market and industry analysis at General Motors Corp., said on conference call with investors Oct. 3 that the company's inventories were ``OK'' and at levels the company expected.

Inventories of imported motor vehicles fell 0.9 percent and sales rose 1.5 percent. The decline in inventories has hampered sales at some companies.

Sales of Honda Motor Co.'s Civic and Accords declined August as the company ran short of four-cylinder engines, said Chris Martin, a spokesman for the Tokyo-based automaker's U.S. unit in Torrance, California.

``We could be selling a whole lot more if we had the inventory,'' Martin said last month.

To contact the reporters on this story: Joe Richter in Washington Jrichter1@bloomberg.net

Last Updated: October 10, 2006 10:00 EDT