Dec. 11 (Bloomberg) -- Inventories at U.S. wholesalers rose more than forecast in October, a sign goods are piling up in the face of slowing demand.
The 0.6 percent increase in stockpiles followed a 1.1 percent gain in September, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey was a 0.4 percent advance. Sales declined 1.2 percent, the biggest drop since June.
While the Commerce Department said it couldn’t quantify the effect of Sandy on the data, it said companies reported both positive and negative influences from the storm. A global slowdown and looming U.S. tax and government spending changes may weigh on orders, indicating distributors will want to keep a tight rein on stockpiles.
“There’s still a lot of uncertainty,” Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “Consumers probably are losing a little bit of momentum.”
At the current pace of sales, wholesalers had enough goods on hand to last 1.22 months, the most since October 2009, the report showed.
The median forecast for wholesale inventories was based on a Bloomberg survey of 29 economists. Estimates ranged from a decrease of 0.5 percent to 0.7 percent gain. The prior month’s figure was unrevised.
Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 1 percent, boosted by automobiles and computer equipment, today’s report showed. Demand for goods meant to last at least three years dropped 0.9 percent.
Auto sales at distributors dropped 3.1 percent in October, the most since May 2011, which may reflect the influence of Sandy. A report this month showed total industry demand rebounded in November as vehicles damaged by the storm were replaced.
The value of unsold non-durable goods fell 0.1 percent as sales slumped 1.4 percent.
Wholesalers, which make up about 30 percent of all business stockpiles, might be feeling the effects of rising retail inventories. At New York-based jeweler Tiffany & Co., year-end stockpiles could be 10 percent higher than a year ago after stores and distribution centers were closed by superstorm Sandy, Chief Financial Officer Patrick McGuiness said on a Nov. 29 earnings call.
Retail stockpiles will be included in the business inventories report due Dec. 13.
The fiscal tightening slated for next year threatens growth and might set back employment. The Thomson Reuters/University of Michigan gauge of consumer sentiment fell to a four-month low in December as Americans grew concerned about the possibility of higher taxes next year.
Payrolls rose by 146,000 workers in November, the Labor Department reported last week, exceeding the median estimate of economists surveyed by Bloomberg.
Today, Federal Reserve policy makers begin a two-day meeting at which they’ll consider whether to boost asset purchases as a way to stimulate the economy.
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