By John S. McClenahen Not including semiconductors, total U.S. business inventories stood at $1.134 trillion at the end of October, 0.2% higher than they were at the end of September, reports the U.S. Department of Commerce. Manufacturers, however, appeared to be more cautious than business generally, with inventories at the end of October at $429.4 billion, a barely measurable 0.00558% higher than at the end of September. "Excluding automobiles, inventories fell 0.2% as the West Coast dock workers [lockout] disrupted the inflow of goods into the U.S.," notes Stan Shipley, a senior economist at Merrill Lynch & Co., New York. "That import flow should return in [the] November [numbers], causing the trade deficit to widen and inventory accumulation to accelerate." Meanwhile, driven by lower prices for gasoline and passenger cars, inflation at the producer level fell 0.4% in November, says the U.S. Labor Department. The November decline in the Producer Price Index (PPI) contrasts with a 1.1% increase in October and a 0.1% rise in September. "Fears about deflation would appear overstated as some of the decline just reflects a pullback from recent trends," says Merrill Lynch's Shipley. But his words don't calm Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers (NAM). Jasinowski's reading of the numbers is that deflation poses a greater threat to the U.S. economy in the months ahead than does inflation. "Clearly, we are caught in an unfortunate synergy of weak investment, falling energy prices and an overvalued dollar that is keeping a lid on price increases at the producer level," says NAM's president. "The prospect of deflation is one that sends shudders through financial markets and underscores the pressing need for fresh economic stimulus when the 108th Congress convenes next month."