The Commerce Department said on Wednesday wholesale inventories slipped 0.1 percent as stocks of both durable and nondurable goods fell. Inventories increased a downwardly revised 0.2 percent in September. Economists polled by Reuters had forecast wholesale inventories ticking up 0.1 percent in October after a previously reported 0.5 percent increase the prior month.
Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into
the calculation of GDP - wholesale stocks excluding autos - also dipped 0.1 percent.
A record back-to-back increase in inventories in the first two quarters of this year left warehouses bulging with unsold merchandise and businesses with little incentive to restock. Inventories subtracted 0.56 percentage point from GDP growth
in the third quarter. That restricted GDP growth to an annualized rate of 2.1 percent.
The drop in wholesale inventories in October could prompt economists to trim their fourth-quarter growth estimates, currently around a 2 percent rate.
Data last week showed manufacturing inventories fell for a fourth straight month in October. Retail inventory data on Friday could shed more light on the magnitude of the anticipated inventory drag in the final three months of the year.
Sales at wholesalers were unchanged in October after increasing 0.5 percent in September. Sales have been soft since last August, in part due to the negative impact of lower oil prices on the value of petroleum products sales At October's sales pace it would take 1.31 months to clear shelves, unchanged from September. The ratio remains high and suggests that businesses are unlikely to ramp up their pace of inventory accumulation any time soon.