WASHINGTON (Reuters) - U.S. wholesale inventories rebounded less than initially estimated in October, with apparel stocks dropping by the most in three years, suggesting that inventory investment could be a drag on fourth-quarter economic growth.
The Commerce Department said on Friday that wholesale inventories edged up 0.1% in October instead of the previously reported 0.2% gain. Stocks at wholesalers dropped 0.7% in September. They gained 3.8% on a year-on-year basis in October.
The component of wholesale inventories that goes into the calculation of gross domestic product rose 0.2% in October.
The pace of inventory accumulation had slowed in the second quarter after stocks surged from the third quarter of 2018 through the first quarter of this year. The inventory overhang has led businesses to place fewer orders at factories, contributing to a downturn in manufacturing activity.
Inventory accumulation helped to lift economic growth to a 2.1% annualized rate in the third quarter, offsetting the drag to GDP from a wider trade deficit. The economy grew at a 2.0% pace in the second quarter.
Growth estimates for the fourth quarter are converging around a 1.8% rate.
In October, wholesale auto inventories fell 0.4% after decreasing 1.3% in the prior month. Apparel inventories tumbled 1.4%, the largest drop since September 2016, after nudging up 0.1% in September.
There were also decreases in furniture and professional equipment inventories. Petroleum inventories dropped 3.7%.
Sales at wholesalers fell 0.7% in October, the biggest decline since December 2018, after dipping 0.1% in September.
Motor vehicle sales rose 0.6% in October after decreasing 3.0% in the previous month. Apparel sales fell 2.4% after rebounding 3.6% in September.
At October's sales pace it would take wholesalers 1.37 months to clear shelves, the most since May 2016, up from 1.36 months in September.