Stockpiles held by U.S. wholesale businesses edged up in July by the smallest amount in a year while sales rose at a healthy clip.

Wholesalers increased their inventories by a slight 0.1 percent in July after a stronger 0.4 percent increase in June, the Commerce Department reported Wednesday. It was the smallest gain since a 0.1 percent increase in stockpiles in July 2013.

Sales rose a solid 0.7 percent in July, up from 0.4 percent in June. The latest increase matched the May gain.

The July slowdown in inventory growth was expected to be temporary given the strength in sales during the month. That gain will likely spur wholesalers to resume faster restocking of store shelves to meet rising demand. Increasing orders to restock lifts factory production and overall economic growth.

Inventory growth is viewed as a good barometer of business sentiment. When companies add goods to their stockpiles, it shows optimism about future demand. If they slow inventory rebuilding, it can mean worries about demand and efforts to keep from being stuck with unsold goods.

The small July advance pushed wholesale inventories to a seasonally adjusted $533.76 billion, up 7.9 percent from a year ago.

Auto inventories rose 1 percent during the month and machinery stockpiles increased 0.5 percent. Inventories of metals fell 1.2 percent and furniture stockpiles at the wholesale level dipped 0.2 percent.

The government on Friday will broaden its reading on inventories by including stockpiles held by manufacturers and retailers.

In the April-June quarter, an acceleration in inventory building contributed one-third of the 4.2 percent growth rate turned in during the spring quarter.

During the first three months of the year, a slowdown in stockpiling had subtracted 1.2 percentage points from growth. That was a major factor sending the economy into reverse during the first quarter when the overall economy contracted at an annual rate of 2.1 percent.

For the rest of the year, most analysts predict that inventory building will support economic growth but will not exhibit the sharp swings seen in the first half of this year.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved