US wholesale inventories increased again in November, a sign that inventory investment could help economic growth in the fourth quarter after weakening GDP for two straight quarters. The data was released later than usual because of the 43 day US government shutdown.
Wholesale Stockpiles Show Steady Growth
According to the Commerce Department’s Census Bureau, wholesale inventories rose 0.2% in November, matching the 0.2% gain in October. Compared to the same time last year, inventories were up 1.8%.
Since inventories are a key part of GDP calculations, this rise suggests they may add to fourth quarter growth instead of dragging it down.
Inventories Were a Drag in Recent Quarters
Business inventories fell for two consecutive quarters, which reduced GDP growth during that period. However, the negative impact was partly balanced by a smaller trade deficit.
Economists have also warned that the longest government shutdown in US history likely weakened GDP growth in the last quarter.
GDP Forecasts Differ Across Analysts
The Atlanta Federal Reserve is currently forecasting 5.4% annualized GDP growth for the fourth quarter. However, major Wall Street banks such as Goldman Sachs expect a much slower pace, below 3.0%.
Wholesale Sales Bounce Back
Wholesale sales improved in November:
- Sales rose 1.3% in November
- After falling 0.4% in October
At the current sales pace, it would take 1.28 months to clear wholesale inventories, slightly faster than 1.30 months in October. This suggests demand strengthened and inventories moved more quickly
