Wholesale inventories rise could help growth in third quarter

The shipping docks of the deepwater harbor of the Port of Seattle is seen on this aerial view photograph taken from a helicopter in Seattle, August 21, 2012.

WASHINGTON (Reuters) - Wholesale inventories in July rose by the most in five months, beating forecasts and suggesting economic growth started the third quarter on slightly better footing than expected.

A separate report on Wednesday showed import prices rose in August as the cost of imported oil jumped, a factor that could weigh on American consumers and temporarily boost inflation.

Wholesale inventories climbed 0.7 percent in July to $485.2 billion, the Commerce Department said. Sales unexpectedly fell, dropping 0.1 percent.

Inventories are a key element in the government's measure of changes in gross domestic product. Weaker growth in inventories dragged on GDP during the second quarter, when the economy expanded at a 1.7 percent annual rate.

July's gain in inventories was enough for some economists to slightly raise forecasts for third-quarter GDP, although others said the drop in sales negated the boost.

"It just shifts the balance of growth from sales to inventories," said Daniel Silver, an economist at JPMorgan in New York.

U.S. economic growth has been woefully slow since the 2007-2009 recession and too weak to push the unemployment rate below 8 percent. The sluggish economy has fueled expectations the Federal Reserve could try to lower borrowing costs by announcing a bond buying program as soon as Thursday.

In July, automobile inventories rose 0.4 percent and computer equipment stocks jumped 3.8 percent, while metals fell 0.7 percent.

Before the inventory data was published, economists were expecting GDP growth in the third quarter to match the second quarter's lackluster pace, according to a Reuters poll.

With the data in hand, Barclays raised its estimate for third quarter growth by two tenths of a point to a 2.2 percent rate. Macroeconomic Advisers lifted their forecast by a tenth to 1.4 percent.

Financial markets largely ignored the data. U.S. stocks rose, boosted by the decision of a top German court to support the euro zone's new 700-billion-euro bailout fund in the latest effort to stem the region's debt crisis. Yields on U.S. government debt also rose.

The European debt crisis looms as a major threat to the U.S. recovery from the 2007-2009 recession.

ENERGY PRICE PRESSURE

In a separate report, the Labor Department said U.S. import prices rose in August for the first time in five months, climbing 0.7 percent.

The cost of petroleum imports increased 4.1 percent. Higher prices at the pump threaten to hurt consumers' pocket books. Analysts had expected overall import prices would rise 1.4 percent in August.

Many economists expect higher fuel costs will contribute to a short-term rise in inflation that could be seen in a report due on Friday on consumer prices.

"Significant energy price gains are likely to be a feature," said Barclays economist Peter Newland.

There was little sign of broader inflation pressures in the import data. Non-petroleum import prices declined 0.2 percent, a sign that the cooling global economy is reducing companies' ability to raise prices.

Prices for imported consumer goods outside automobiles fell 0.3 percent, while prices were flat for cars and auto parts brought into the country.

Import prices were flat from major trading partners Japan and China. Import prices from the European Union fell 0.4 percent.

The report also showed export prices rose 0.9 percent last month. Analysts had expected export prices to rise 0.4 percent.

(Editing by Neil Stempleman)