WASHINGTON (AP) — U.S. businesses likely increased their stockpiles in September, a sign of greater confidence in the economy.
Economists forecast that business stockpiles rose 0.5 percent, slightly below August's gain of 0.6 percent. The Commerce Department will release the report at 10 a.m. EST Wednesday.
Two reports earlier this month have already shown that manufacturers and wholesale distributors boosted their stockpiles substantially in September. That led many economists to raise their estimates for economic growth over the summer.
The department said last week that wholesalers boosted their stockpiles 1.1 percent, the fastest pace in nine months. That followed a 0.6 percent gain reported earlier this month by manufacturers.
As a result, economists at Barclays Capital raised their estimates for economic growth in the July-September quarter to 3.2 percent, as did several other Wall Street firms. A third report last week showing a narrower trade deficit contributed to the improved outlook.
That's a big improvement from the government's estimate last month that the economy expanded at an annual pace of only 2 percent in the third quarter. But that figure was calculated before the government received the inventory and trade data.
Companies typically boost their stockpiles when they anticipate sales will rise in coming months. Faster restocking helps drive economic growth. When businesses order more goods, it typically leads to more factory production.
Economists at JPMorgan Chase said that retail stockpiles, the third category of business inventories, likely fell because of lower inventories at auto dealers. Auto sales dipped in October but remained at a healthy level.
Wholesale stockpiles account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total and manufacturing inventories represent about 40 percent.
Total business stockpiles rose to $1.6 trillion in August. That was 22.4 percent higher than the low reached in September 2009.
While growth this summer has improved, economists are still wary about the final three months of this year. Many are worried that companies will hold back on hiring and investment because of the "fiscal cliff," the package of tax increases and spending cuts slated to take effect early next year. Unless Congress and the White House agree to delay or replace the cliff, it could push the economy into recession in the first half of next year.
Recent reports, however, have shown signs of improvement. Hiring has picked up, which has boosted consumer confidence. Employers added 171,000 jobs in October and job gains in August and September were higher than first estimated. The unemployment rose to 7.9 percent from 7.8 percent as more of those out of work began searching for jobs.
A survey by the University of Michigan last week found that consumer sentiment improved for the fourth straight month to its highest level in five years.