U.S. businesses added to their stockpiles at a slower pace in October as sales were weak for a third straight month.
Businesses boosted stockpiles 0.2 percent in October after a 0.3 percent September gain, the Commerce Department said Thursday. Business sales dropped 0.1 percent in October after no gain in September and a 0.4 percent drop in August.
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The string of weak sales reports had raised concerns about whether businesses might start cutting back on their restocking in the face of falling demand. But in a separate report Wednesday, the government said that retail sales posted a better-than-expected 0.7 percent rise in November, a welcome sign of a rebound in consumer demand at the start of the holiday shopping season.
The rebound in consumer demand should spur further inventory restocking and provide support for economic growth.
After the retail sales report was released, economists said they might revise up their outlook for overall economic growth in the fourth quarter. Consumer spending accounts for 70 percent of economic activity.
For October, stockpiles at the wholesale level increased 0.4 percent while inventories held by retailers were up 0.2 percent and manufacturing inventories edged up 0.1 percent.
Economists expect that consumer demand will pick up in coming months, spurred by solid job gains which mean households have more income to spend and the recent declines in gas prices, which act like a tax cut, leaving consumers with more money to spend on other items.