US business inventories increase again in October

WASHINGTON, Jan 14 (Reuters) - U.S. business inventories increased further in October as sales dropped, suggesting inventories could contribute to gross domestic product in the fourth quarter.

Inventories rose 0.3%, matching the gain ?in September, the Commerce Department's Census Bureau said on Wednesday. Inventories are ?a key component of GDP and one of the ?most volatile. Economists polled by Reuters had ?forecast inventories ?would rise 0.2%. They increased 1.4% on a year-over-year basis in October. ?The report was delayed by ?the 43-day shutdown of the federal government.?

Retail inventories advanced 0.6% in October after increasing 0.5% ?in September. Motor vehicle ?inventories rose ?1.3%, matching September's gain. Retail inventories excluding autos, which go into the calculation of GDP, increased 0.3% ?after edging up 0.1% in the prior month.?

Wholesale inventories climbed 0.2% in October while stocks at manufacturers were unchanged.?

Business inventories have declined for two straight quarters, subtracting from GDP growth. The drag was, however, more ?than ?offset by a shrinking trade deficit during that period.

The Atlanta Federal Reserve is currently forecasting GDP ?will increase at a 5.1% annualized rate in the fourth quarter amid a further reduction in the trade deficit. The economy grew at a 4.3% pace in the July-September quarter.

Business sales fell 0.2% in October after easing 0.1% in September. ?Sales at retailers fell 0.1%. At October's sales pace, it would take 1.38 months for businesses to clear shelves, up from 1.37 ?months in September.

(Reporting by Lucia Mutikani; Editing by Paul Simao)