Business inventories dropped by 1.1 percent in November, as sales--particularly of autos--picked up, the Commerce Department reported yesterday. Analysts said the drop sets the stage for a recovery in production and is a further sign that the end of the recession is at hand.

The $5.6 billion drop in inventories was the largest ever, Commerce Department chief economist Robert Ortner said. It brought manufacturing and trade inventories down to $508.6 billion. The inventory-sales ratio, which typically peaks at the end of recession, slipped from its seven-year high of 1.55 at the end of October to 1.51 at the end of November, the report said. This means that inventories would last 1.51 months at the present rate of sale.

In a separate report, the Labor Department said new claims for state unemployment benefits climbed by 35,000 to 550,000 in the week ended Jan. 1, the first weekly increase for six weeks.

However, the increase still leaves the initial claims total well below its peak of 703,000 reached last September, and Ortner commented, "I don't think it means the downward trend has been reversed."

The initial claims figures are particularly hard to interpret at this time of year because of the effect of the Christmas and New Year holidays. Economist Allen Sinai of Data Resources Inc. said the new claims figure "tells the same story" as those in the previous few weeks that suggest "the pace of layoffs has slowed, although not totally stopped."

The decline in inventories "suggests to me that industry was very much into the inventory adjustment process in November, and probably December too," he said, adding "that's a plus." Although a decline in inventories drags down the total gross national product (GNP), it is a precondition for recovery. Once manufacturers succeed in reducing inventories, then they are more likely to respond to an increase in sales by raising production than by simply selling off more inventories.

"Both sets of data" published by the government yesterday, "are clearly suggestive that the turn is at hand," Alan Greenspan, former economic adviser to President Ford, said yesterday.

The government's first "flash" number for fourth quarter GNP--showing a decline of 2.2 percent at an annual rate--may be revised upward, Ortner said, as sales in the final months of the year were stronger than first thought. The GNP figures are to be published next week.

The Commerce release showed a 1.2 percent increase in November in the combined manufacturers and trade shipments. Retail sales were up 2.6 percent.