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Wholesale inventories rose in October

Stocks at U.S. wholesalers rose more than forecast in October and sales surged, a government report showed on Tuesday, in a sign factories may need to boost production to keep up with demand.
/ Source: Reuters

Stocks at U.S. wholesalers rose more than forecast in October and sales surged, a government report showed on Tuesday, in a sign factories may need to boost production to keep up with demand.

Wholesale inventories climbed 0.5 percent in October, the Commerce Department said, boosted by the largest build-up in supplies of farm products on record and by a 2.7 percent increase in auto stocks. The overall increase was larger than the 0.2 percent gain expected by economists.

"I think what they show is that the inventory rebuilding cycle that everyone had been anticipating for the fourth quarter is coming to fruition," said Drew Matus, economist at Lehman Brothers. "That should add to fourth quarter growth."

Sales of wholesale goods soared 2.0 percent, the largest rise since May 1999, helped by a record 14.5 percent increase in demand for farm products.

The stocks-to-sales ratio, which measures the time it would take to deplete inventories at the current sales pace, fell to 1.18 months, the lowest on record.