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Ahead of the Bell: US Wholesale Inventories

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November 15, 2013 06:21 AM EST | AP

WASHINGTON (AP) — The Commerce Department reports on how much wholesalers adjusted their stockpiles in September and how much their sales changed. The report will be released at 10 a.m. Eastern Friday.

STEADY GAIN: Wholesalers likely restocked at a healthy pace in September, adding to the 0.5 percent gain in August that was the largest since January.

Strong restocking by businesses was a major factor behind the economy's 2.8 percent annual growth rate in the July-September quarter. Building stockpiles contributed 0.8 percentage point to growth.

Rising stockpiles boost growth because it means factories have produced more goods.

Meanwhile, wholesale sales rose 0.6 percent in August, the fourth gain in five months. That suggests companies are able to sell the goods and won't be caught with excess stockpiles.

HARD TO MATCH: Restocking in August was driven partly by the recoveries in housing and autos. Auto inventories jumped 2.3 percent and furniture stockpiles rose 1.1 percent for the second straight month. Stockpiles of pharmaceuticals, oil and gas, and clothing also increased.

Still, consumers and businesses have been spending at a cautious pace. If that continues, companies won't need to keep building stockpiles at the same rapid pace as they did in the third quarter.

Consumers increased their spending at just a 1.5 percent annual rate in the July-September quarter, the slowest pace in more than two years. And businesses actually reduced their purchases of new equipment.

Those trends suggest that companies won't need to add much to their stockpiles in the October-December quarter. Inventory changes may even subtract from growth.

As a result, economists at Bank of America Merrill Lynch have cut their forecast for fourth quarter growth to an annual rate of 1.7 percent, down from 2 percent.