US business inventories rise solidly in December

[WASHINGTON] US business inventories increased solidly in December, with stocks at retailers larger than initially estimated.

Business inventories rose 0.6 per cent in December after gaining 0.5 per cent in November, the Commerce Department said on Wednesday.

Inventories are a key component of gross domestic product.

Economists polled by Reuters had forecast inventories rising 0.5 per cent in December. Inventories fell 2.6 per cent on a year-on-year basis in December.

Retail inventories increased 1.2 per cent in December, instead of 1.0 per cent as estimated in an advance report published last month.

That followed a 0.7 per centr rise in November. Motor vehicle inventories increased 1.1 per cent, rather than 0.9 per cent as previously reported.

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Retail inventories excluding autos, which go into the calculation of GDP, gained 1.2 per cent, instead of 1.1per cent as estimated last month.

The economy grew at a 4.0 per cent annualised rate in the fourth quarter after a historic 33.4 per cent growth pace in the third quarter.

Inventories contributed to GDP growth for two straight quarters.

Businesses are replenishing inventories after they were drawn down early in the pandemic. That has helped to underpin manufacturing, offsetting slowing consumer spending.

Wholesale inventories rose 0.3 per cent in December. Stocks at manufacturers also gained 0.3 per cent.

REUTERS