WASHINGTON (Reuters) – U.S. wholesale inventories increased less than initially thought in July amid a sharp rebound in sales, casting doubt on whether inventory investment would contribute to economic growth in the third quarter.
The Commerce Department’s Census Bureau said on Monday that wholesale inventories rose 0.2%, revised down from the 0.3% gain estimated last month. Stocks at wholesalers were unchanged in June.
Economists polled by Reuters had expected that the rise in inventories, a key part of gross domestic product, would be unrevised at 0.3%. Inventories advanced 0.4% on a year-on-year basis in July.
Private inventory investment contributed to the economy’s 3.0% annualized growth rate in the second quarter. There is hope that inventories could offset some the drag on GDP from a widening trade deficit this quarter.
The trade gap has increased as businesses boosted imports likely in anticipation of higher tariffs on goods.
Most of the imports could end up as unsold goods in warehouses. Attention now shifts to retail inventory data, scheduled to be released next week.
Wholesale motor vehicle inventories jumped 1.0% after rising 0.7% in June. Excluding autos, wholesale inventories gained 0.1% in July. This component goes into the calculation of GDP.
Sales at wholesalers surged 1.1% in July after declining 0.3% in June. At July’s sales pace it would take wholesalers 1.35 months to clear shelves, down from 1.36 months in June.
