U.S. wholesale inventories increased strongly in November as sales declined amid higher borrowing costs, government data confirmed on Tuesday
The Commerce Department said wholesale inventories rose 1.0% as previously reported last month. Stocks at wholesalers increased 0.6% in October. Economists polled by Reuters had expected that inventories would be unrevised.
Wholesale inventories accelerated 20.9% in November on a year-on-year basis.
Inventories are a key part of gross domestic product. There were increases in furniture, computer and professional equipment stocks as well as electrical equipment, metals, hardware and machinery.
But motor vehicle inventories were unchanged after rising 0.5% in October. Wholesale inventories, excluding autos, increased 1.0% in November. This component goes into the calculation of GDP.
Inventories have been a drag on GDP for two straight quarters, subtracting more than one percentage point in the third quarter. The economy grew at a 3.2% annualized rate in the third quarter after contracting in the first half of 2022.
Inventory accumulation has decelerated considerably from the robust pace in late 2021 and early 2022 in part because of improved supply chains and ebbing demand for goods as the Federal Reserve aggressively raises interest rates to combat inflation.
Sales at wholesalers fell 0.6% in November after being unchanged in October. At November’s sales pace it would take wholesalers 1.35 months to clear shelves, up from 1.32 months in October.