WASHINGTON, Dec 16 (Reuters) – U.S. business inventories rose slightly more than expected in September, suggesting inventories could drive economic growth in the third quarter.
The U.S. Commerce Department’s Census Bureau said inventories rose 0.2% after being flat in August. Inventories are a key component of gross domestic product and one of the most volatile. Economists polled by Reuters had forecast inventories would rise 0.1%. The year-on-year growth in September was 1.2%.
The report was delayed by the recently ended 43-day government shutdown.
Retail inventories rose 0.4% in September after remaining flat in August. Motor vehicle inventories jumped 1.2% after rising 0.1% in August. Retail inventories, which exclude cars included in GDP calculations, were flat for the second month in a row.
Wholesale inventories rose 0.5% in September, while manufacturer inventories fell 0.1%.
In the second quarter, business inventories decreased by US$18.3 billion at an annualized rate, accounting for 3.44 percentage points of GDP. However, this was more than offset by a record 4.83 percentage point contribution from the smaller trade deficit.
The Atlanta Fed forecasts third-quarter GDP growth at an annual rate of 3.6%. The government will release its first estimate of third-quarter GDP on Dec. 23, which has been delayed by the government shutdown. The economy grew 3.8% in the April-June quarter. While the rebound in inventories likely boosted GDP growth last quarter, it also reflected weak demand.
Business sales remained unchanged in September for the second month in a row. Retailer sales increased 0.1%. At September’s sales pace, it would take companies 1.37 months to clear shelves, the same as in August.
(Reporting by Lucia Mutikani; Editing by Tomotsu Noyama)