US business inventories up 0.3 percent
WASHINGTON (AP) -- U.S. businesses added to their stockpiles at a faster rate in September, though sales remained weak.
Business inventories increased 0.3 percent in September following a tiny 0.1 percent rise in August, the Commerce Department reported Friday. The August increase was the weakest showing in more than a year. Sales were flat in September after having fallen 0.5 percent in August.
The weakness in sales may have made businesses more cautious about restocking their shelves until they see more evidence of rising demand. When companies add goods to their stockpiles, it typically reflects optimism about future demand. Reductions in inventory restocking can be a sign of uneasiness about future sales. A rise in inventories at a time of falling sales can be a sign of involuntary inventory building.
But in a hopeful sign for the future, the government said in a separate report Friday that retail sales showed a modest rebound in October, rising by 0.3 percent after a September decline.
The inventories report showed that stockpiles held by wholesalers were up 0.6 percent in September, while manufacturers saw a 0.1 percent rise in inventories. Merchandise held by retailers fell by 0.2 percent.
Inventory changes can have a big impact on the economy. In the April-June quarter, faster inventory building by businesses accounted for 1.4 percentage points of the 4.6 percent annual growth rate. In the July-September period, inventory building slowed, which subtracted 0.6 percentage point from growth.
The economy still posted a healthy growth rate of 3.5 percent in the July-September period. Many economists believe growth will remain at a solid pace around 3 percent in the current October-December quarter and for all of 2015.
The optimism is based in part on the sustained gains that have been made in hiring and in driving the unemployment rate lower. The jobless rate fell to 5.8 percent for October, the lowest point in more than six years.