WASHINGTON (Reuters) - U.S. business inventories increased moderately in September, suggesting that businesses were becoming more cautious about ordering more merchandise as higher borrowing costs slow demand.
Business inventories increased 0.4% after rising 0.9% in August, the Commerce Department said on Wednesday. Inventories are a key component of gross domestic product. Economists polled by Reuters had forecast inventories climbing advancing 0.5%.
Inventories increased 17.8% on a year-on-year basis in September. Retail inventories gained 0.4% in September as estimated in an advance report published last month. That followed a 1.4% advance in August.
Improving supply chains and slowing demand for goods amid higher interest rates as well as a shift in spending back to services has left retailers with excess merchandise. That has forced some to offer price discounts and hold back on placing more orders until they have cleared the unwanted stock.
Economists worry that the oversupply of goods could be one of the triggers of an anticipated recession next year.
Motor vehicle inventories rose 1.9% as estimated last month. They increased 3.6% in August. Retail inventories excluding autos, which go into the calculation of GDP, slipped 0.1% as estimated last month.
Wholesale inventories increased 0.6% in September. Stocks at manufacturers rose 0.2%.
Inventory accumulation has decelerated considerably from the robust pace in late 2021 and early 2022. As a result, inventories have been a drag on GDP for two straight quarters.
Business sales rose 0.2% in September after gaining 0.3% in August. At September's sales pace, it would take 1.33 months for businesses to clear shelves, unchanged from August.