U.S. wholesale inventories revised higher in September

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FILE PHOTO: Automobiles are seen for sale at a car lot in Queens, New York, US May 24, 2018. Businesshala / Shannon Stapleton
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WASHINGTON (Businesshala) – US wholesale inventories rose more in September than initially thought, but automobile stocks fell further amid a global semiconductor shortage that is slashing automotive production.

The Commerce Department said on Wednesday that wholesale inventories increased by 1.4% instead of 1.1% last month. Wholesalers’ shares rose 1.3% in August. Wholesale inventory grew 13.1% in September compared to a year ago.

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Automotive inventories declined 1.8% after falling 0.3% in August. Inventories are a significant part of GDP. Wholesale inventory excluding auto grew 1.7% in September. This component goes into the calculation of GDP.

The slowing pace of inventory decline in the third quarter accounted for a 2.0% annual increase in GDP growth over the previous quarter. Inventory was exhausted in the first half of the year, but shortages related to the COVID-19 pandemic are making it difficult to rebuild stock.

Restocking is expected to boost manufacturing and economic growth in the fourth quarter. But some economists are beginning to worry that an inventory imbalance could derail economic expansion.

“The current supply-chain disruption is making it difficult for businesses to manage their inventory,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Therefore, it is possible that businesses may be caught with excess inventory in a few years as they over-order today to compensate for delays. This has caused recessions in the past and is a symptom of a bullish cycle. “

Sales from wholesalers rose 1.1% in September after falling 0.9% in August. It will take 1.23 months for wholesalers to clear shelves, unchanged from August at the pace of September sales.

Reporting by Lucia Muticani; Editing by Andrea Ricci

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