Economy

US wholesalers boost stockpiles for 3rd month

WASHINGTON (AP) — U.S. wholesalers increased their stockpiles in September for the third straight month, an indication that they expect more demand from businesses and consumers.

Wholesale stockpiles rose a seasonally adjusted 0.4 percent, the Labor Department said Friday. That follows an increase of 0.8 percent in the previous month. August's increase was the highest in seven months.

Sales at wholesale businesses rose 0.6 percent in September, up from 0.4 percent in August. Stockpiles of computer equipment and machinery increased. Inventories of consumer items such as groceries, clothing and beer, wine and other alcoholic beverages also rose.

Strong restocking helped drive the economy's 2.8 percent annual growth rate in the July-September quarter. Rising stockpiles contributed 0.8 percentage point to growth. Rising stockpiles boost growth because it means factories have produced more goods. And rising sales among wholesalers shows businesses are unlikely to get caught with too many unsold goods on their shelves.

Still, the gains may not last. Consumers and businesses have been spending at a cautious pace. If that continues, companies won't need to keep building stockpiles at the same rapid pace as they did in the third quarter.

Consumers increased their spending at just a 1.5 percent annual rate in the July-September quarter, the slowest pace in more than two years. And businesses actually reduced their purchases of new equipment.

Those trends suggest that companies won't need to add much to their stockpiles in the October-December quarter. Inventory changes may even subtract from growth. As a result, economists at Bank of America Merrill Lynch have cut their forecast for fourth-quarter growth to an annual rate of 1.7 percent, down from a 2 percent rate.

Follow Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber

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