Wholesale inventories up more than expected as sales tumble
WASHINGTON (Reuters) - Wholesale inventories rose more than expected in October as sales fell for the first time in three months, according to a government report on Tuesday that hinted at some piling up of goods in warehouses.
The Commerce Department said wholesale inventories increased 0.6 percent to a record $497.1 billion after an unrevised 1.1 percent rise in September.
Economists polled by Reuters had expected stocks of unsold goods at U.S. wholesalers to rise 0.4 percent. The Commerce Department said superstorm Sandy, which struck the East Coast in late October, had both a positive and negative impact on the wholesale data.
Inventories are a key component of gross domestic product changes and accounted for more than a quarter of the economy's annual 2.7 percent growth pace in the third quarter.
That led many economist to anticipate a draw down on inventories this quarter and weigh on growth. Data scheduled on Thursday on overall business inventories for October and November retail sales could shed more light on fourth-quarter GDP estimates.
So far, GDP growth estimates for the quarter range from 0.5 percent to 2.3 percent.
The value of petroleum stocks fell 3.1 percent in October after rising 5.8 percent in September. Automobile inventories rose 0.4 percent in October after falling 0.8 percent the prior month.
Sales at wholesalers dropped 1.2 percent after increasing 1.9 percent the prior month. Economists had expected sales to nudge up 0.1 percent.
Sales at wholesalers in October were mixed, with auto sales tumbling 3.1 percent, extending the prior month's 0.8 percent decline. Petroleum sales fell 5.7 percent after rising 8.2 percent in September.
However, farm products and metals sales rose.
At October's weak sales pace it will take 1.22 months to clear shelves, the highest ratio since October 2009. The inventories/sales ratio was at 1.20 months in September.