U.S. wholesale businesses increased their stockpiles in November – but at less than half the pace of October, when they jumped by the largest amount in two years.
Wholesalers boosted stockpiles 0.5 percent in November – compared with October, when inventories increased 1.3 percent – the Commerce Department reported Friday. The October gain had been the biggest one-month increase since a 1.5 percent rise in October 2011.
Sales were solid in both months, rising 1 percent in November following a 1.1 percent increase in October.
Rising stockpiles boost growth, because it means factories have produced more goods. Robust restocking contributed two-fifths of the 4.1 percent growth rate in the July-September quarter. Economists say growth slowed in the fourth quarter in large part because they believe the pace of restocking slowed following the third-quarter surge.
With the November gain, inventories at the wholesale level stood at a seasonally adjusted $516.4 billion, 3.3 percent higher than a year ago.
The government tracks inventories held by wholesalers, manufacturers and retailers. A report covering all inventory levels will be released next Tuesday.
At the wholesale level, auto stockpiles dropped by 0.8 percent in December, while stockpiles of computer equipment rose 3 percent after a big, 5.7 percent, decline in October.
Recently, various signs of strength, including a big improvement in the trade deficit, have prompted economists to boost their forecasts for fourth-quarter growth. Some now believe growth will be around 3 percent, an upgrade from early estimates that growth would be less than 2 percent.
Analysts believe the momentum will carry over into 2014, reflecting better-than-expected recent gains.
Factory activity, as measured by the Institute for Supply Management’s manufacturing index, stayed near a 2 1/2-year high in December. Americans are buying more cars and homes, increasing demand for steel, furniture and other manufactured goods.
The reports add to encouraging signs that 2014 could mark a turning point for an economy that has struggled to gain altitude since the Great Recession ended in June 2009.
Analysts expect the economy will face fewer barriers in 2014, especially in the area of federal government policies. Higher taxes in 2013 and across-the-board spending cuts shaved an estimated 1.5 percentage points from growth last year.
Many economists are looking for growth close to 3 percent in 2014, up from an expected 1.8 percent growth rate in 2013.