Wholesale Inventories Rise, but at Unimpressive Rate
By Lucia Mutikani
WASHINGTON -- U.S. wholesale inventories rose less than expected in December, suggesting a moderation in the pace of stock accumulation at the end of the year that could see fourth-quarter growth estimates trimmed.
The Commerce Department said Tuesday wholesale inventories increased 0.3 percent after an unrevised 0.5 percent gain in November.
Economists polled by Reuters forecast stocks at wholesalers rising 0.5 percent in December. For all of 2013, wholesale inventories increased 3.9 percent.
Inventories are a key component of gross domestic product changes. Excluding autos, wholesale inventories advanced 0.3 percent in December. %VIRTUAL-article-sponsoredlinks%The component goes into the calculation of GDP.
The government in its advance estimate for fourth-quarter GDP said inventories increased $127.2 billion, the largest rise since the first quarter of 1998.
The change in inventories from the third quarter added 0.42 percentage point to the fourth-quarter's 3.2 percent annualized growth rate, confounding economist expectations for a slower pace of restocking, which would have weighed on output.
That left economists anticipating that GDP would be lowered by at least 0.4 percentage point to 2.8 percent when the government publishes its second estimate later this month.
Economists believe the current level of inventory is unsustainable and expect businesses will step back to work through current stocks in the first quarter, which would restrain growth in the first three months of 2014.
Sales at wholesalers rose 0.5 percent in December, compared to a 1.0 percent increase the prior month. December's increase was in line with expectations.
At December's sales pace it would take 1.17 months to clear shelves, unchanged from November.