Wholesale inventories up; sales post gain

WASHINGTON Wed Oct 10, 2012 11:56am EDT

1 of 2. The warehouse style of shopping is shown inside a Costco store in Carlsbad, California February 28, 2012. Costco will report earnings this week.

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WASHINGTON (Reuters) - Wholesale inventories rose as expected in August while sales at wholesalers posted the first gain after three consecutive months of decline, according to government data released on Wednesday.

Total wholesale inventories advanced 0.5 percent to $487.5 billion, the Commerce Department said. Year-over-year, inventories were up 5.3 percent from August 2011.

Economists polled by Reuters had expected stocks of unsold goods at U.S. wholesalers to rise 0.5 percent after advancing by 0.6 percent in July, which was revised down from a previously reported 0.7 percent gain.

"Despite the uptick in sales, companies want to stay cautious with their inventories, capital spending and hirings. They have slowed their pace of inventory accumulation," said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York.

In August, automobile inventories were unchanged and computer equipment stocks fell 5.1 percent, while machinery increased 1.7 percent.

Inventories are a key element in the government's measure of changes in gross domestic product and can highlight underlying strength or weakness in U.S. growth, which notched a 1.3 percent annual pace in the second quarter.

"This might take a bit away from overall economic growth as companies want to stay cautious ahead of the Presidential election," she said. Americans vote on November 6 and polls show President Barack Obama and his Republican challenger, Mitt Romney, tied in a close race for the White House.

However, other economists thought the data supported a slight improvement in the outlook for the third quarter, with Barclays in New York upping their tracking estimate of GDP by one tenth of a percentage point to a 2.1 percent annual pace.

The advance estimate of third-quarter U.S. GDP is due on October 26.

"Today's wholesale sector report offered an encouraging sign that demand is beginning to rebound," said Barclays' Peter Newland, who also cited the better tone on sales.

Sales at wholesalers rose 0.9 percent, the first increase since April. Economists had expected sales to be up by 0.5 percent.

Sales gains in August were widespread, with furniture up by 1.1 percent and machinery advancing 0.5 percent. Petroleum sales rose 5.6 percent and auto sales were up by 2 percent.

At August's sales pace it would take 1.20 months to clear shelves, down slightly from 1.21 months in July.

(Reporting by Alister Bull, Additional reporting by Richard Leong in New York; Editing by Andrea Ricci)

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Comments (2)
ConradU812 wrote:
See? Even the economy is in a better mood since Romney began leading in the polls!

Oct 10, 2012 4:02pm EDT  --  Report as abuse
WildWilly wrote:
I’d like Reuters to mention why a rise or drop in inventories is good or bad. In my thinking, it is completely confusing. If inventories went up does this mean more things were manufactured in anticipation of higher sales? Or does it mean some corporate planner fluffed the numbers & inventory is accumulating instead of being bought? And if inventories went down does this mean more things were being bought? Or does it mean again that some corporate planner fluffed the numbers & didn’t make enough things to satisfy demand? So when inventories are reported rising, to me that could be good or bad. And when inventories are reported dropping, to me that could be good or bad. Do please provide context. Saying that it’s part of the GDP calculation doesn’t explain the meaning of the rise or fall to me. A simplistic view would be that rising inventories are always good because they boost GDP, and I suspect that is not always the case. We’re not all experts in economics out here. Help us out a little.

Oct 11, 2012 1:53am EDT  --  Report as abuse
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