U.S. wholesale inventories fell as previously reported in October amid a surge in sales, supporting views that inventory investment would provide a modest boost to economic growth in the fourth quarter.
The Commerce Department said on Friday that wholesale inventories decreased 0.4 percent after rising 0.1 percent in September. The department reported last month that wholesale inventories declined 0.4 percent in October.
The component of wholesale inventories that goes into the calculation of GDP – wholesale stocks excluding autos – also fell 0.4 percent in October.
Inventory investment contributed half a percentage point to the economy’s 3.2 percent annualized growth rate in the third quarter. Inventories had weighed on GDP growth since the second quarter of 2015.
With a report this week showing stocks at manufacturers were unchanged in October, economists believe inventories’ contribution to growth in the fourth quarter will be modest.
Still, strong consumer demand, against the backdrop of a labor market that is near full employment, should keep the
economy on solid ground. The Atlanta Federal Reserve is forecasting GDP rising at a 2.6 percent pace this quarter.