Inventories in the U.S. rose more than forecast in September as companies stocked shelves ahead of the holiday season. The 0.9 percent increase matched the rise in August that was larger than previously estimated, the Commerce Department said today in Washington. Sales rose 0.5 percent, led by retailers. Companies had enough goods on hand to supply 1.27 month’s worth of sales at September’s pace, the same as in the prior month. Inventory replenishment, a major driver in the early part of the economic recovery, is continuing at a stronger-than- forecast pace, indicating stockpiling will need to cool in coming months, adding less to growth. “As we see inventory investment decelerate in coming quarters, the impact on GDP will be negative,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. At the same time, “inventory levels remain fairly lean and companies will need to continue restocking shelves and warehouses.” Economists forecast inventories would rise 0.8 percent, according to the median of 50 projections in a Bloomberg News survey. Estimates ranged from gains of 0.2 percent to 1 percent. The August gain in stockpiles was previously estimated at 0.6 percent. Other reports today showed retail sales climbed more than forecast in October and manufacturing in the New York region unexpectedly shrank this month. Sales Climb Retail purchases rose 1.2 percent, exceeding the highest estimate among economists surveyed, after a 0.7 percent September increase that was larger than previously estimated, Commerce Department figures showed. The Federal Reserve Bank of New York’s so-called Empire State Index fell to minus 11.1 from 15.7 in October, the branch of the central bank said. Readings less than zero signal contractions in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. Retailers’ inventories, the only part of today’s report not previously released, increased 0.8 percent in September, matching the gain in sales. Auto dealers and building material stores led the advance. Factory inventories rose 0.7 percent and wholesale stockpiles increased 1.5 percent. The gains in stockpiles exceeded the advance in sales in both categories, indicating that manufacturers and distributors may need to cool the pace of inventory rebuilding in coming months. Economic Growth The world’s largest economy grew at a 2 percent annual pace in the third quarter, up from a 1.7 percent gain in the second quarter, according to figures from the Commerce Department last month. Gains in inventories contributed 1.44 percentage point to growth in the third quarter after a 0.82 point contribution in the second quarter. Macy’s Inc. is among retailers adding to stockpiles in anticipation spending will pick up during the holidays. The second-biggest U.S. department-store chain last week reported third-quarter earnings that exceeded analysts’ estimates. “We have focused on building fresh inventories in opportunity areas to help drive our fourth-quarter sales,” Chief Financial Officer Karen Hoguet said on a conference call. “While higher than it has been, the inventory level is still well below our comp-store sales trend.” Carmakers are also building inventories as demand picks up. General Motors Co. and Ford Motor Co. reported U.S. sales increases that topped analysts’ estimates, making October the best month for vehicle deliveries in more than a year. “That’s a good harbinger of the economy starting to move forward,” Ken Czubay, Ford’s U.S. sales chief, said on a conference call. “It’s good to see the industry nudging forward.” To contact the reporters on this story: Robert Willis in Washington at bwillis@bloomberg.net To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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