WASHINGTON – Inventories at U.S. wholesalers climbed a steeper-than-expected 1.1 percent in November as stocks increased across a wide variety of categories, including cars and computers, a government report showed on Monday.
Economists polled by Reuters had expected a milder 0.7 percent rise in wholesale inventories after October's 1.1 percent gain, but financial markets largely shrugged off the report.
Despite the larger-than-expected gain, a 0.7 percent increase in sales kept the inventory-to-sales ratio — a measure of how long it would take to deplete inventories at the current sales pace — at a lean 1.15 months' worth, the Commerce Department (search) said.
The rise in inventories reflected a 1.3 percent gain in stocks of durable goods — big-ticket items meant to last three years or more — and a 0.9 gain in shorter-lived items.
Automobile inventories, which had dropped 1.6 percent in October, climbed 0.5 percent as sales dropped 2.3 percent, metal stocks gained 3.9 percent and computer inventories shot up 4.0 percent.
The report could lead economists to bump up their predictions of fourth-quarter economic growth.
The Blue Chip Economic Indicators (search) newsletter said on Monday top forecasters had nudged higher their projections of growth for both the fourth quarter and full-year 2005, predicting solid job gains and an uptick in core inflation.
About half of the economists surveyed by the newsletter revised their projections for 2005 upward, taking the consensus estimate for gross domestic product growth to 3.6 percent from 3.5 percent forecast last month.
That pace would mark a slowdown from an estimated 4.4 percent advance in 2004.
Economists also raised expectations for fourth-quarter growth by a tenth of a percentage point, to 3.7 percent, after consumer spending ended 2004 on a stronger note than feared.
Blue Chip said while the red-hot housing sector will cool this year as mortgage rates rise and the Federal Reserve (search) raises the key federal funds rate to 3.5 percent by year end, the U.S. economy is facing another "pretty good" year.
The newsletter forecast that the economy would create an average of 187,000 jobs a month in 2005, for a total of 2.2 million, which would match 2004's gains. The unemployment rate, however, will fall only slightly, to an average of just 5.3 percent from 5.4 percent last year, as more workers return to the labor force to hunt for work.
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