Wholesale Inventories Rise To Three-Year High In October

Inventories of wholesalers rose to a three-year high, the Commerce Department said, offering yet another sign of a potential slowdown in the economy.

The buildup of inventories rose a bigger-than-expected 0.8% to a seasonally adjusted $392.92 billion, the report said. Meanwhile, wholesale sales fell by 0.5% in October to $327.78 billion. This was the second decline in sales in a row and the first pair of consecutive declines since April and May 2003.

Economists were looking for a 0.5% increase in inventories in October.

September inventories were revised to a 0.7% increase from a previously reported 0.8% climb. Sales fell 1.5% in September, revised from the 1.2% decrease previously reported for that month.

The inventory-to-sales ratio rose to 1.20, up from 1.18 in September and the highest level since 1.20 in June 2005. stood at 1.15 in October 2005.

While greater inventory accumulation adds to GDP, it also can cut into future production and, thus, lead to weaker economic growth in the future.

Inventories of durable goods - meant to last three or more years - increased 0.7% in October. Durable goods sales declined 0.4%.

Auto inventories climbed by 0.9% in October; sales in this sector rose 2.5%. Computer equipment stocks rose 2.3%. Electrical inventories advanced 2.8%.

Inventories of non-durable goods increased 0.9% in October, after going down 0.7% the previous month. Farm products stocks surged 23.2%. Petroleum stocks fell 1.0%. Non-durables sales decreased 0.6% in October, after dropping 2.3% the previous month. Petroleum sales were 5.1% lower.