WASHINGTON, Dec 12 (Reuters) - Stocks of unsold goods at U.S. businesses dropped at the sharpest rate in more than five years during October and sales took a record tumble, the Commerce Department said on Friday in the latest evidence of rapidly slowing economic activity.
Total business inventories declined 0.6 percent to a seasonally adjusted $1.497 trillion after falling 0.4 percent in September. It was the biggest drop in inventories since a matching 0.6 percent fall in August 2003 and outstripped forecasts by Wall Street economists surveyed by Reuters who had expected a 0.2 percent fall.
Business sales dropped steeply by 3.5 percent to a seasonally adjusted $1.119 trillion, the biggest monthly decrease since the data series was started in 1992, after falling 2.4 percent in September.
As a result, the sales-to-inventories ratio that measures how long it would take to clear store shelves at the current sales pace climbed to 1.34 months' worth from 1.30 in September.
The last time the ratio was higher was in mid-2003, a measure of the sales stress that businesses at all levels from manufacturing to retailers and wholesalers have come under in a recessionary economy.
(Reporting by Glenn Somerville, Editing by Chizu Nomiyama)