US businesses likely increased stockpiles in October at same pace as September

MarketsAssociated Press

The Commerce Department reports on business stockpiles in October. The report will be issued at 10 a.m. EST Thursday.

STOCKPILES HIGHER: The expectation is that business inventories rose 0.3 percent in October, according to a survey of economists by data firm FactSet.

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INVENTORIES RISING: In September, U.S. businesses added to their stockpiles at a faster rate, pushing inventories up by 0.3 percent after a tiny 0.1 percent gain in August.

But total business sales remained weak, showing no gain at all in September after having fallen 0.5 percent in August.

In a report earlier this week, the government announced that stockpiles at the wholesale level rose a moderate 0.4 percent in October, matching the September gain. Sales at the wholesale level rose just 0.2 percent in October after a flat reading in September and a 0.8 percent drop in August.

Economists are watching closely to see if businesses become reluctant to expand inventories in the face of weaker sales.

That development could dampen economic growth because the restocking of store shelves spurs factory production and increased employment in manufacturing.

Economists believe that consumer demand, which accounts for 70 percent of economic activity, will pick up, 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.