U.S. Wholesale Stockpiles Grew 1.1% in September

WASHINGTON (AP) -- U.S. wholesale businesses increased their stockpiles in September at the fastest pace in nine months, and their sales jumped by the largest amount in 18 months. The increases suggest the U.S. economy grew faster over the summer than first estimated.

Wholesale stockpiles grew 1.1 percent in September, the Commerce Department said Friday. That's up from a 0.8 percent increase in August, which was revised higher.

Sales at the wholesale level rose 2 percent in September. That was double the August gain and the largest increase since March 2011.

Economists said the faster inventory growth will prompt the government to raise its July September economic growth estimate from the 2-percent annual rate reported last month. When businesses order more goods, it generally leads to more factory production, and that boosts economic growth.

The government issued its first estimate for third-quarter growth before knowing the September wholesale inventories figures. The growth estimate also did not include the September trade figures. On Thursday, the government said the U.S. trade deficit narrowed to its lowest level in nearly two years because exports rose to a record high.

Both reports suggest economic growth was stronger over the summer than first thought. The government issues its second estimate for third-quarter growth on Nov. 29.

Economists at Barclays (NYSE: BCS  ) said a string of better-than-expected numbers including Friday's wholesale inventories report had prompted them to boost their estimate for third-quarter growth to 3.2 percent.

Some analysts said the strong rise in sales in September should encourage more restocking in coming months which would give a further boost to factory production. But Steven Wood, chief economist at Insight Economics, cautioned that while the sales gain in September was the best in 18 months, the trend in sales growth has been slowing.

Stockpiles climbed to a seasonally adjusted $494.2 billion in September, 28.4 percent above a September 2009 post-recession low. Companies typically boost stockpiles when they are optimistic sales will rise.

Economic growth slowed in the spring, in part because high unemployment and low pay increases kept U.S. consumers from spending more freely. Consumer confidence has increased sharply since then and that has translated into a rise in consumer spending, which accounts for nearly 70 percent of economic activity.

A stronger job market could also help boost growth in the final three months of the year. When more people find jobs, consumer spending typically increases.

The government reported last week that employers added 171,000 jobs in October and hiring was stronger in August and September than first thought. Job growth at that pace was an indication that the economy is strengthening but at a slow pace.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2105031, ~/Articles/ArticleHandler.aspx, 12/20/2014 6:32:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement