US wholesale inventories rise solidly, may boost fourth-quarter GDP

[WASHINGTON] US wholesale inventories recorded their largest increase in seven months in November and October's stocks were revised higher, suggesting restocking may boost fourth-quarter growth.

The Commerce Department said on Friday wholesale inventories rose 0.8 per cent, despite an energy price-related decline in the value of petroleum stocks. October's wholesale stocks were revised up to show a 0.6 per cent gain.

Wall Street had expected wholesale inventories to rise only 0.3 per cent in November following a previously reported 0.4 per cent increase in October.

Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP - wholesale stocks excluding autos - rose 0.8 per cent.

Coming on the heels of a smaller-than-expected trade deficit in November, that could see economists further raising their fourth-quarter GDP estimates.

Growth forecasts were pushed up by at least 0.8 percentage point to as high as a 3.5 per cent annualized pace following the trade report on Wednesday.

The economy grew at a 5.0 per cent pace in the third quarter, with inventories being neutral. Economists have been expecting restocking to be a drag to growth in the final three months of 2014.

Stocks at wholesalers in November were lifted by an increase in inventories of electrical goods, machinery, hardware, metals and professional equipment. Auto inventories rose 0.6 per cent.

Sales at wholesalers fell 0.3 per cent in November after being flat the prior month. At November's sales pace it would take 1.21 months to clear shelves, up from 1.20 months in October.

REUTERS