U.S. wholesale businesses boosted their stockpiles sharply in October as sales rose, the government said Tuesday, offering encouraging signs for economic growth in the final three months of the year. The Commerce Department said that wholesale stockpiles grew 1.4 percent in October, which was nearly triple the 0.5 percent gain in September. Sales at the wholesale level increased 1 percent in October after a 0.8 percent gain in September. Rising stockpiles boost growth because it means factories have produced more goods. Robust restocking drove roughly half of the 3.6 percent annualized economic growth in the July-September quarter. Some economists had predicted that growth would slow in the October-December quarter to an annual rate of 2 percent or less as companies reduced their inventory building in response to slowing demand. But the strong rise in October suggests businesses expect to see solid sales in the coming months. The gain could prompt some to rethink their forecasts. But if sales falter, companies could be left with large stockpiles of unwanted goods, which could ultimately slow restocking and weigh on overall growth, if not in the fourth quarter than at the start of next year. The October increase pushed wholesale stockpiles up to a seasonally adjusted $514.1 billion, 3.3 percent higher than the same month last year. In October, stockpiles held by auto dealers surged 2.7 percent. Automakers reported solid sales in November and are on pace for their best sales year in almost seven years. Economists are hopeful that growth will rebound next year, helped by a pickup in hiring, gradually improving wages and rising household wealth.
