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UPDATE 1-U.S. wholesale stock accumulation slows in December

WASHINGTON, Feb 11 (Reuters) - U.S. wholesale inventories rose less than expected in December, spurring expectations that the government would cut its fourth-quarter growth estimate.

The Commerce Department said on Tuesday wholesale inventories increased 0.3 percent after an unrevised 0.5 percent gain in November. Economists had expected a 0.5 percent rise in stocks at wholesalers.

Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP - wholesale stocks excluding autos - rose 0.3 percent in December.

The government in its advance estimate for fourth-quarter GDP last month said inventories increased $127.2 billion, the largest rise since the first quarter of 1998.

In the wake of December's slow pace of inventory accumulation, which was less than what the government had assumed in last month's estimate, economists at JPMorgan and Barclays expect fourth-quarter GDP would be trimmed by about 0.2 percentage point.

"We now believe real inventories increased around $119 billion in the fourth quarter," said Daniel Silver, an economist at JPMorgan in New York.

"Although this is still a pretty rapid pace of inventory accumulation, our revised estimate means that inventories could be a bit less of a drag on first-quarter growth than we had previously been anticipating."

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.

The inventory data comes on the heels of a report last week showing a bigger trade deficit in December than the government had assumed in its first estimate for fourth-quarter growth.

That left economists anticipating that GDP would be lowered by at least 0.4 percentage point.

The two reports, when taken together, suggest GDP growth will be lowered to a 2.6 percent rate when the government publishes its second estimate later this month.

For all of 2013, wholesale inventories increased 3.9 percent. 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.

Sales at wholesalers rose 0.5 percent in December, compared to a 1.0 percent increase the prior month. December's increase was in line with expectations.

At December's sales pace it would take 1.17 months to clear shelves, unchanged from November.

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