WASHINGTON (Reuters) - U.S. wholesale inventories increased a bit more than initially thought in October as sales dropped, suggesting inventory investment could contribute to economic growth in the fourth quarter.
The Commerce Department said on Friday wholesale inventories rose 0.8 percent instead of gaining 0.7 percent as reported last month. Stocks at wholesalers increased 0.7 percent in September.
They increased 6.9 percent year-on-year in October.
The component of wholesale inventories that goes into the calculation of gross domestic product growth gained 0.5 percent in October. Inventories rebounded in the third quarter after being depleted in the April-June period.
Inventories 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.
In October, wholesale auto inventories jumped 3.4 percent after advancing 2.5 percent in September. Machinery inventories increased 2.1 percent after a rising 1.4 percent in September. Stocks of farm products dropped 2.7 percent in October after decreasing 4.7 percent in the prior month.
Petroleum inventories tumbled 8.9 percent after increasing 5.7 percent in September.
Sales at wholesalers fell 0.2 in October after gaining 0.1 percent in September. There were decreases in sales of motor vehicles, furniture and hardware.
At October’s sales pace it would take wholesalers 1.28 months to clear shelves, up from 1.27 months in September.
Reporting by Lucia Mutikani; Editing by Andrea Ricci