WASHINGTON, Jan 13 (Reuters) - U.S. business inventories recorded their biggest increase in nearly 1-1/2 years in November, boosted by a strong rise among retailers, which
suggested inventory investment would contribute to economic growth in the fourth quarter.
The Commerce Department on Friday said business inventories increased 0.7 percent. That was the biggest increase since June 2015 and followed an upwardly revised 0.1 percent dip in October. Inventories were previously reported to have fallen 0.2 percent in October.
Inventories are a key component of gross domestic product.
Retail inventories increased 1.0 percent in November as reported in an advance report published last month. November’s increase was the largest since September 2105. Retail inventories fell 0.4 percent in October.
Retail inventories excluding autos, which go into the calculation of GDP, increased 0.5 percent as reported last month. That was the biggest rise since September 2015 and followed a 0.2 percent drop in October.
Inventory investment contributed half a percentage point to the economy’s 3.5 percent annualized growth rate in the third quarter. Inventories had weighed on GDP growth since the second quarter of 2015. The Atlanta Federal Reserve currently forecasts GDP rising at a 2.9 percent pace in the fourth quarter.
In November, motor vehicle inventories rose 1.9 percent and clothing stocks increased 0.8 percent. Inventories of building materials and garden equipment advanced 1.2 percent. Business sales edged up 0.1 percent after rising 0.7 percent in October. At November’s sales pace, it would take 1.38 months for businesses to clear shelves, up from 1.37 months in October.
Reporting by Lucia Mutikani; Editing by Paul Simao