Business stockpiles at the wholesale level expected to hold steady in October

MarketsAssociated Press

The Commerce Department reports on wholesale stockpiles in October. The report is scheduled for release at 10 a.m. EST Tuesday.

STOCKPILES STEADY: The expectation of economists polled by the data firm FactSet is that stockpiles held by wholesale businesses was unchanged in October, and that sales by these businesses slipped 0.1 percent.

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INVENTORY GAIN: In September, U.S. wholesale businesses posted a moderate gain in their restocking while sales edged up slightly after a big decline in August.

If businesses cut back on their inventories, it often signals concern about future sales. Swings in inventories can have a big impact on overall economic growth. A big rise in inventory building in the April-June quarter contributed 1.4 percentage points to growth during that period. However, businesses slowed stockpiling in the third quarter and that subtracted 0.1 percentage point from growth.

Economists believe inventory growth will be a small negative holding back growth in the current October-December quarter.

The economy posted a healthy growth rate of 3.9 percent in the July-September period.

While analysts are looking for growth to slow to around 2.5 percent in the current quarter, they expect the economy next year will turn in its best performance in a decade, growing by around 3.1 percent.

Economists believe that steady job gains this year paired with big declines in energy prices will boost consumer spending.