WASHINGTON (Reuters) – U.S. business inventories increased solidly in October, suggesting inventory investment could help to keep the economy on a moderate growth path in the fourth quarter amid a resurgence in COVID-19 cases and lack of more fiscal stimulus.
Business inventories rose 0.7% in October after increasing 0.8% in September, the Commerce Department said on Wednesday. Inventories are a key component of gross domestic product. October’s rise was in line with economists’ expectations. They were down 4.0% on a year-on-year basis in October.
Retail inventories rose 0.9% in October instead of 0.8% as estimated in an advance report published last month. That followed a 1.6% jump in September. Motor vehicle inventories advanced 1.0% as previously reported.
Retail inventories excluding autos, which go into the calculation of GDP, increased 0.8% instead of 0.7% as estimated last month.
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Gross domestic product rebounded at a historic 33.1% annualized growth rate in the third quarter, thanks to more than $3 trillion in government pandemic relief for businesses and workers. That followed a 31.4% rate of contraction in the second quarter, the deepest since the government started keeping records in 1947.
Inventories added to GDP growth last quarter after being a drag for five straight quarters. Growth estimates for the fourth quarter are mostly below a 5% rate because of the outbreak in coronavirus infections and the largely expired fiscal stimulus.
Wholesale inventories jumped 1.1% in October. Stocks at manufacturers rebounded 0.2%.
Business sales increased 0.9% in October, matching September’s rise. At October’s sales pace, it would take 1.31 months for businesses to clear shelves, down from 1.32 months in September.
Reporting by Lucia Mutikani; Editing by Andrea Ricci