BUSINESS

US wholesale stockpiles edge up 0.3 per cent in September; sales rebound from big drop

11/12/2014 10:14 EST | Updated 01/12/2015 05:59 EST
WASHINGTON - U.S. wholesale businesses posted a modest gain in their stockpiles in September as sales rebounded from a big decline the previous month.

Stockpiles at the wholesale level increased 0.3 per cent in September following a 0.6 per cent rise in August, the Commerce Department reported Wednesday. Sales by wholesalers rose 0.2 per cent in September after a sharp 0.8 per cent August decline.

The big August setback in sales may have made businesses more cautious about restocking their shelves until they see more evidence of rising demand. When companies add goods to their stockpiles it typically reflects optimism about future demand.

But if businesses are cutting back on inventory rebuilding, it can be a sign of concern about future sales. Swings in inventories can have a big impact on overall economic growth.

The inventory increase reflected a 0.8 per cent rise in stockpiles of durable goods with auto inventories rising 1.2 per cent and furniture up 1.5 per cent. Inventories on non-durable goods fell 0.6 per cent with declines in a number of areas, led by a 5.3 per cent drop in petroleum, a drop that reflected falling energy prices.

The economy posted a healthy growth rate of 3.5 per cent in the July-September period, and many economists believe growth will remain at a solid pace around 3 per cent in the current October-December quarter and for all of next year.

The optimism is based in part on the sustained gains that have been made in hiring and in driving the unemployment rate lower. The jobless rate fell to 5.8 per cent for October, the lowest point in more than six years.

Inventory changes can have a big impact on the economy. In the April-June quarter, faster inventory building by businesses accounted for 1.4 percentage points of the 4.6 per cent annual growth rate. In the July-September period, inventory building slowed and this subtracted 0.6 percentage point from growth.