US business inventories post largest gain in nine months
U.S. business inventories rose more than expected in October, showing no signs of slowing yet after an aggressive accumulation in the third quarter left warehouses bulging with unsold stock.
The Commerce Department said Thursday that inventories increased 0.7 percent, the largest gain since January, after rising 0.6 percent in September.
Economists polled by Reuters had forecast inventories rising 0.3 percent in October.
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Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos—which go into the calculation of GDP—rose 0.2 percent after increasing 0.4 percent in September.
Businesses accumulated $116.5 billion worth of inventories during the third quarter, the most since the first quarter of 1998. Inventories accounted for almost half of the economy's 3.6 percent annualized growth pace in the July-September quarter.
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The unusually strong pace of inventory accumulation in the face of sluggish domestic demand left many economists anticipating that businesses would need to pull back. That would undercut fourth-quarter GDP growth.
Business sales rose 0.5 percent in October after gaining 0.3 percent the prior month. At October's sales pace, it would take 1.29 months for businesses to clear shelves, matching the prior month.