WASHINGTON (Reuters] – The U.S.’s business inventories increased in October. This suggests that restocking may again help economic growth, even though the motor vehicle inventory is still very low because of scarcity.

The Commerce Department announced Wednesday that business inventories increased 1.2% following a 0.8% increase in September. The key ingredient of gross domestic products is inventory.

Reuters polled economists to forecast inventory increases of 1.1%. In October, inventories grew 7.8% year-on-year. According to an advance report last month, retail inventories increased 0.1% in October. This follows a September 0.1% drop. According to last month’s estimates, motor vehicle inventories fell 1.0% rather than 0.7%.

Last month’s estimate of 0.4% was incorrect, the 0.5% increase in retail inventory excluding autos was 0.5%.

All of the 2.1% annualized increase in GDP was attributable to the slow pace of inventory decline in the third-quarter. Inventory depletion in the first half year and COVID-19-related shortages making it hard to rebuild stock makes it challenging.

Stocking up is essential to keep manufacturing going and support the economy.

Jonathan Golub (chief U.S. equity strategist), stated that “Inventory to-sales ratios collapsed throughout this pandemic.” Credit Suisse (SIX:) Securities USA in New York. Supply constraints are a contributing factor to the declines in nominal GDP, however strong sales is the real culprit. Strong nominal GDP should be supported in 2022 by adequate inventories and the need for their replenishment.

Economists worry that business owners who are worried about stock delays could order too much inventory to cause economic contraction.

In October, wholesale inventories increased 2.3% Manufacturer stocks increased 0.8%.

After rising 1.2% in September, business sales increased 2.1% in October. Businesses would need 1.24 months to clear their shelves if October’s pace of sales is met, which was 1.26 months less than September.