WASHINGTON — U.S. businesses increased their stockpiles in September, further evidence that economic growth was stronger over the summer than first thought.
The Commerce Department said Wednesday that inventories grew 0.7 percent in September, after a 0.6 percent increase in August.
Retailers, manufacturers and wholesale distributors all boosted their stockpiles. Their sales rose 1.4 percent in September — the most in more than a year.
Companies typically increase their stockpiles when they anticipate sales will rise in coming months. Faster restocking helps drive economic growth. When businesses order more goods, it usually leads to more factory production.
Still, a separate report Wednesday showed that retail sales dropped in October. That suggests companies will have to cut back on rebuilding their stockpiles in the final three months of this year, which could slow growth.
Economists think Superstorm Sandy likely depressed sales at the end of last month by closing stores and cutting off power. Online and catalog sales dropped sharply.
Sandy also depressed car sales and slowed business in the Northeast at the end of the month.
The Commerce Department said Wednesday that sales dropped 0.3 percent after three months of gains. Auto sales fell 1.5 percent, the most in more than a year.
Excluding the volatile categories of autos, gas and building materials, sales fell 0.1 percent. That followed a 0.9 percent gain in September for that category. Online and catalog purchases fell 1.8 percent, the most in a year. Electronics and clothing stores also posted lower sales.
The government said Sandy “had both positive and negative effects” on sales. Some stores and restaurants closed and lost business. Others reported sales increases ahead of the storm as people bought supplies.
Most economists said they thought the storm overall held back sales. Still, they noted that consumers showed signs of cutting back on spending before the weather disrupted business.
“Looking past (Sandy’s) impact, U.S. consumers appeared to dial it back a notch,” said Robert Kavcic, an economist at BMO Capital Markets. “There was relatively broad-based weakness in this report.”
Paul Dales, senior U.S. economist at Capital Economics, said November will be a crucial test of the consumer. He noted that many could be starting to worry about tax cuts that will expire at the end of the year if Congress and the White House fail to reach a budget deal before then.
“A bounce-back would point to a temporary Sandy-induced softening, while another soft month would suggest that the threat of a sharp fall in after-tax incomes in the new year is worrying households,” Dales said.
Meanwhile, wholesale prices fell in October as a big drop in gasoline and other energy prices offset a rise in the cost of food.
Wholesale prices dipped 0.2 percent last month, the Labor Department said Wednesday. It was the first decline since May and followed big gains of 1.1 percent in September and 1.7 percent in August, increases that had been driven by spikes in energy.
Energy prices retreated a bit in October, dipping 0.5 percent, but food costs were up 0.4 percent as the summer drought continued to put pressure on some food prices.
Core prices, which exclude food and energy, fell 0.2 percent in October, the biggest drop in two years. Over the past year, core prices were up a moderate 2.1 percent, evidence inflation remains under control.