WASHINGTON, Dec 14 (Reuters) - - U.S. business inventories rose solidly in October as stocks at retailers increased by the most in more than a year, suggesting inventory investment could contribute to economic growth in the fourth quarter.
The Commerce Department said on Friday business inventories advanced 0.6 percent after increasing 0.5 percent in September.
October’s gain in inventories, which are a key component of gross domestic product, was in line with economists’ expectations.
Retail inventories increased 0.8 percent in October. While that was slightly lower than the 0.9 percent gain reported in an advance estimate published last month, the increase was the biggest since August 2017. Retail inventories edged up 0.1 percent in September.
Motor vehicle inventories advanced 1.1 percent in October rather than the 1.2 percent rise reported last month. Auto inventories increased 0.5 percent in September.
Retail inventories excluding autos, which go into the calculation of GDP, increased 0.7 percent in October as estimated last month. That was the biggest rise since December 2017 and followed a 0.1 percent dip in September.
Wholesale inventories rose 0.8 percent in October and stocks at manufacturers gained 0.1 percent.
Inventories rebounded in the third quarter after being depleted in the April-June period. Inventory investment added 2.27 percentage points to the third quarter’s 3.5 percent annualized growth rate.
Given strong domestic demand, businesses are likely to continue boosting stocks of goods, which should underpin production at factories and support economic growth in the fourth quarter.
Business sales rose 0.3 percent in October after a similar gain in September. At October’s sales pace, it would take 1.35 months for businesses to clear shelves, the most in six months and up from 1.34 months in September.
Reporting by Lucia Mutikani; Editing by Andrea Ricci Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: firstname.lastname@example.org