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U.S. wholesale inventories revised lower in October

Warehouse workers deal with inventory stacked up to the ceiling at an ABT Electronics Facility in Glenview

WASHINGTON (Reuters) - U.S. wholesale inventories increased less than initially thought in October, suggesting that businesses were carefully managing their inventory amid slowing demand.

The Commerce Department said on Friday that wholesale inventories rose 0.5% instead of 0.8% as reported last month. Stocks at wholesalers increased 0.6% in September.

Economists polled by Reuters had expected that inventories would be unrevised. Wholesale inventories increased 21.9% in October on a year-on-year basis.

Inventories are a key part of gross domestic product. There were decreases in furniture, computer and professional equipment stocks. Wholesale motor vehicle inventories were unchanged after rising 1.4% in September.

Wholesale inventories, excluding autos, increased 0.6% in October. This component goes into the calculation of GDP.

Inventories have been a drag on GDP for two straight quarters, subtracting almost one percentage point in the third quarter. The economy grew at a 2.9% annualized rate last quarter after contracting in the first half of the year.

Inventory accumulation has decelerated considerably from the robust pace in late 2021 and early 2022 in part because of ebbing demand for goods as the Federal Reserve aggressively raises interest rates to combat inflation.

Sales at wholesalers rose 0.4% in October after gaining 0.1% in September. At October's sales pace it would take wholesalers 1.32 months to clear shelves, unchanged from September.

(Reporting by Lucia Mutikani;Editing by Elaine Hardcastle)