U.S. Business Inventories Report – October

WASHINGTON (Reuters) – U.S. business inventories edged up in October, as modest increases in stocks at retailers and wholesalers were partially offset by a decline at manufacturers.

Inventories rose 0.1% after being unchanged in September, according to the Commerce Department's Census Bureau on Tuesday. This gain was in line with economists' expectations and a key component of gross domestic product (GDP), with inventories up 2.4% year-on-year in October.

The pace of inventory accumulation may increase as businesses prepare for potential higher import tariffs. President-elect Donald Trump has proposed a 25% tariff on all products from Mexico and Canada, and an additional 10% on goods from China on his first day in office.

Inventories and trade are often volatile components of GDP. Private inventory investment was a small drag on GDP in Q3, which grew at a 2.8% annualized rate during the July-September quarter. Current growth estimates for Q4 are as high as 3.3%.

Retail inventories rose 0.2% in October, revised up from the previously estimated 0.1% gain. They increased 0.7% in September. Motor vehicle inventories increased 0.2%, down from 0.3% reported earlier, with a 1.8% rise in September.

Retail inventories excluding autos, essential for GDP calculations, edged up 0.1%, after a 1.6% increase in September. Wholesale inventories rose 0.2%, while manufacturing stocks dipped 0.1%.

Business sales were unchanged in October after a 0.3% increase in September. It would now take 1.37 months for businesses to clear their shelves, unchanged from September.