WASHINGTON (Reuters) - U.S. business inventories recorded their biggest increase in nine months in August, suggesting that inventory investment could boost economic growth in the third quarter.
The Commerce Department said on Friday that business inventories increased 0.7 percent after rising 0.3 percent in July. Inventories are a key component of gross domestic product.
Retail inventories gained 0.7 percent in August as estimated last month. Retail inventories were unchanged in July.
Motor vehicle inventories rose 1.3 percent instead of the previously reported 1.2 percent jump. Retail inventories excluding autos, which go into the calculation of GDP, increased 0.4 percent as reported last month.
They slipped 0.1 percent in July. August’s gain suggests inventory investment could contribute to GDP in the third quarter after adding just over one-tenth of a percentage point to the 3.1 percent annualized pace of growth in the April-June period.
Inventory investment, business spending on equipment and trade are seen cushioning the impact of Hurricanes Harvey, Irma and Maria on third-quarter GDP. The storms are expected to chop off at least six-tenths of a percentage point from economic growth in the July-September period.
Business sales increased 0.7 percent in August, the largest gain since last December, after rising 0.3 percent in August. At August’s sales pace, it would take 1.38 months for businesses to clear shelves, unchanged from July.
Reporting by Lucia Mutikani; Editing by Andrea Ricci