U.S. wholesale inventories increased less than initially thought in September amid decreases in stocks of petroleum and computer equipment, also suggesting that businesses were carefully managing their inventory amid slowing demand.
The Commerce Department said on Wednesday that wholesale inventories rose 0.6% instead of 0.8% as reported last month. Stocks at wholesalers advanced 1.4% in August. Economists polled by Reuters had expected that inventories would be unrevised.
Wholesale inventories increased 24.1% in September on a year-on-year basis. Inventories are a key part of gross domestic product. Petroleum stocks fell 3.8% after rising 3.4% in August, while those of computers and electronic products slipped 0.5%.
Wholesale motor vehicle inventories rose 1.8% after accelerating 5.1% in August. Wholesale inventories, excluding autos, gained 0.4% in September. This component goes into the calculation of GDP.
Inventories have been a drag on GDP for two straight quarters, subtracting 0.7 percentage point in the third quarter. The economy grew at a 2.6% annualized rate last quarter after contracting in the first half of the year.
Inventory accumulation has decelerated considerably from the robust pace in late 2021 and early 2022 because of easing supply chain bottlenecks and ebbing demand for goods as the Federal Reserve aggressively raises interest rates to combat inflation.
Some businesses, especially in the retail sector are sitting on piles of unsold goods, forcing them to place fewer orders with factories and exacerbating fears of a recession.
Sales at wholesalers picked up 0.4% in September after being unchanged in August. At September’s sales pace it would take wholesalers 1.31 months to clear shelves, unchanged from August.
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