Washington, DC, Dec. 9--Wholesale inventories rose in October by the largest amount in ten months as companies beefed up auto stocks.
Separately, the Institute for Supply Management forecast 5.8% revenue growth in manufacturing in 2004, more than double this year's growth. The private research group expects 5.7% revenue growth in nonmanufacturing, which includes construction, agriculture and services.
"Manufacturing purchasing and supply executives are optimistic about their organizations' prospects for the first half and predict additional growth during the second half of 2004," said Norbert Ore, who directs the ISM's monthly survey.
The ISM pegged the increase in capital spending at 3.2% in manufacturing, and 7.1% in nonmanufacturing sector. Factories' capacity utilization is expected rise to 80.1% next year. It was at 73.5% in October.
In the wholesale-trade report, inventories expanded by 0.5% to a seasonally adjusted $291.20 billion, after a revised gain of 0.3% in September, the Commerce Department reported Tuesday.
Economists had been expecting inventories to increase by only 0.2% in October, according to a survey by Dow Jones and CNBC.
Wholesale sales jumped 2%, the largest increase since May 1999, to a seasonally adjusted $246.84 billion. That followed a revised gain of 1% in September.
The inventory-to-sales ratio, which measures how long it would take in months for firms to use their inventories, rose to 1.18 from 1.20.
Inventories of durable goods--items such as cars that are made to last at least three years--rose by 0.4%. Within that category, auto stocks shot up 2.7%, the biggest increase in auto inventory since May 2002.
Metal stocks edged up 0.1%. Lumber inventories rose by 1.6%. Machinery supplies decreased 0.4%. Stocks of computer equipment went up by 1.1%. Inventories of electrical goods slid 0.9%.
Inventories of nondurable goods rose 0.8%, although petroleum inventories sank 0.9%, drugs fell 1.0% and grocery supplies declined 0.9%. Farm products shot up 16.4% and paper inventories advanced 0.8%.
Sales of durable goods increased 1.8% for the month, while sales of nondurables rose 2.2%.
Wholesale inventories were 1.9% higher than in October 2002. Sales were up 6.6% from a year earlier.
