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US business inventories unexpectedly fell in October, suggesting that inventory investment could weigh on economic growth this quarter.
Business inventories dipped 0.1 per cent, the first decline since June, after increasing 0.2 per cent in September, the Commerce Department's Census Bureau said on Thursday.
Economists had expected that inventories, a key component of gross domestic product, would be unchanged. Inventories increased 0.6 per cent on a year-on-year basis in October.
Business inventories are expected to subtract from gross domestic product in the fourth quarter. Private inventory investment contributed 1.40 percentage points to the economy's 5.2 per cent annualized growth pace in the third quarter. Growth estimates for the October-December quarter are below a 2 per cent rate.
A survey from the Institute for Supply Management this month found that customer inventories had increased "toward the upper end of 'about right' territory" in November, suggesting limited scope for businesses to restock at the third quarter's clip. Higher interest rates are tamping down demand.
Retail inventories slipped 0.1 per cent in October, instead of being unchanged as estimated in an advance report published last month. They rose 0.4 per cent in September.
Motor vehicle inventories increased 1.9 per cent, rather than 2.0 per cent as estimated last month. They rose 2.3 per cent in September.
Retail inventories excluding autos, which go into the calculation of GDP, fell by an unrevised 0.9 per cent. They decreased 0.4 per cent in September. Wholesale inventories dropped 0.4 per cent, while stocks at manufacturers gained 0.1 per cent.
Business sales fell 1.0 per cent in October after rising 0.9 per cent in September. At October's sales pace, it would take 1.37 months for businesses to clear shelves, up from 1.36 months in September.