U.S. Wholesale Stockpiles Rise by Most Since January

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Operations In The Flower District As Wholesale Inventories Figures Are Held Due To Government Shutdown
Craig Warga/Bloomberg via Getty ImagesRoses on display at FleuraMetz wholesale flower shop in New York earlier this month.
By CHRISTOPHER S. RUGABER

WASHINGTON -- U.S. wholesalers boosted their stockpiles in August by the most in seven months, a positive sign that many companies expected demand to rise.

Wholesale inventories rose 0.5 percent in August, the biggest gain since January, the Commerce Department said Friday. Sales also rose, climbing 0.6 percent, the fourth gain in five months.

The restocking was driven partly by recoveries in housing and autos. Auto inventories jumped 2.3 percent, the biggest gain in four months, and furniture stockpiles rose 1.1 percent for the second straight month. Stockpiles of pharmaceuticals, oil and gas, and clothing also increased.

Rising inventories point to stronger growth because it means factories have produced more goods. And higher wholesale sales means businesses are unlikely to get caught with too many unsold goods on their shelves.

The report was delayed by the 16-day partial government shutdown. It was originally scheduled to be released Oct. 9.

Despite August's increase in stockpiles, economic growth in the third quarter is likely to be weak.
A separate report Friday showed that business investment in machinery and other equipment fell in September.

Many economists now expect growth at an annual rate of about 1.5 percent in the third quarter. That would be down from a 2.5 percent rate in the April-June quarter, when restocking by all businesses added 0.4 percentage point to growth.

The outlook for the economy in the fourth quarter has dimmed because hiring has slowed and the government shutdown is expected to weigh on growth.

Employers added just 148,000 jobs in September, lowering the monthly average for the July-September to just 143,000. That's down from an average of 182,000 a month in the April-June quarter, and well below the 207,000 a month in the January-March quarter.

The shutdown cut about $25 billion from the economy, according to several estimates, and likely held growth to an annual rate of 2 percent or less in the fourth quarter. Previously, many economists thought growth would improve in the fourth quarter to a 2.5 percent pace or higher.


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