WASHINGTON, Feb 13 (Reuters) - U.S. business inventories rose as expected in December, but slowed down significantly excluding automobiles.
The Commerce Department said on Thursday inventories increased 0.5 percent after rising 0.4 percent in November.
Economists polled by Reuters had forecast inventories rising 0.5 percent in December.
Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos - which go into the calculation of GDP - gained 0.2 percent after advancing 0.6 percent in November.
The government in its advance estimate for fourth-quarter GDP said inventories increased $127.2 billion, the largest rise since the first quarter of 1998.
The change in inventories from the third quarter added 0.42 percentage point to the fourth-quarter’s 3.2 percent annualized growth rate, confounding economists’ expectations for a slower pace of restocking, which would have weighed on output.
Economists believe the current level of inventory is unsustainable and expect businesses will step back to work through current stocks in the first quarter, which would restrain growth in the first three months of 2014.
Business sales rose 0.1 percent in December, after gaining 0.7 percent the prior month.
At December’s sales pace, it would take 1.30 months for businesses to clear shelves, up from 1.29 months in November.