WASHINGTON, Jan 15 (Reuters) - U.S. business inventories increased in November, supporting expectations that inventory investment was likely the main driver of economic growth in the fourth quarter.
Business inventories rose 0.5% in November after increasing 0.8% in October, the Commerce Department said on Friday. Inventories are a key component of gross domestic product. November's increase was in line with economists' expectations. Inventories fell 3.2% on a year-on-year basis in November.
Retail inventories rose 0.7% in November as estimated in an advance report published last month. That followed a 0.9% increase in October. Motor vehicle inventories jumped 1.9% instead of 1.5% as previously reported.
Retail inventories excluding autos, which go into the calculation of GDP, gained 0.2% instead of 0.3% as estimated last month.
Businesses are replenishing inventories after they were drawn down early in the pandemic. That has helped to underpin manufacturing. Inventory accumulation is expected to blunt some of the drag on GDP from a widening trade deficit, which hit a more than 14-year high in November.
The economy grew at a historic 33.4% pace in the third quarter after shrinking at a 31.4% rate in the April-June period, the deepest since the government started keeping records in 1947. Inventories added to GDP growth in the third quarter after being a drag for five straight quarters.
Growth estimates for the fourth quarter are mostly below a 5% rate because of the outbreak in coronavirus infections and the largely expired fiscal stimulus.
Wholesale inventories were unchanged in November. Stocks at manufacturers rose 0.7%.
Business sales slipped 0.1% in November after accelerating 0.9% in October. At November's sales pace, it would take 1.32 months for businesses to clear shelves, unchanged from October. (Reporting by Lucia Mutikani)