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US Wholesale Inventories Rise Only 0.1 Percent in July

H.S. Borji
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US Wholesale Inventories Rise Only 0.1 Percent in July

US wholesale inventories edged up only slightly in July, which could dampen the government’s revised estimate of second quarter GDP growth due at the end of the month.

Wholesale inventories climbed 0.1 percent in July to $533.8 billion, the smallest monthly increase since July 2013, the Commerce Department reported today in Washington. That followed a downwardly revised gain of 0.2 percent in June. Economists forecast a monthly gain of 0.5 percent in July.

Compared to July 2013, wholesale inventories were up 7.9 percent.

Wholesale inventories, which measure how much US wholesale businesses adjusted their stockpiles, are used to calculate national gross domestic product. Faster restocking at wholesalers boosts economic growth because it reflects stronger demand for factory goods, which leads to higher manufacturing output.

Wholesale inventories excluding automobiles – the component used to calculate GDP – was unchanged in July.

July durable goods inventories increased 0.3 percent and were up 8.4 percent from a year ago.

Inventories of nondurable goods were virtually unchanged, but were up 7 percent from a year ago.

Inventories of hardware and plumbing and related supplies increased 1.8 percent in July, while inventories of computer equipment and software decreased 0.4 percent, official data showed.

US gross domestic product increased 4.2 percent annually in the second quarter, according to a revised government estimate released last month. Stockpiles added 1.4 percentage points to the second quarter growth tally. The third estimate, which factors in data from the Quarterly Services Survey, will be released on September 26.

The Quarterly Services Survey provides a snapshot of projected revenues in the US service economy, which accounts for more than two-thirds of national output. Services sector output expanded at a sharper rate over the summer, according to the Institute for Supply Management. ISM’s gauge of US service activity reached a new record high in August.

The QSS report led to a major revision of first quarter GDP, as government economists reacted to an unexpected fall in healthcare spending. The latest estimate of first quarter output was released last month. The Commerce Department said national output declined at an annual rate of 2.1 percent in the January to March period.

Wholesale sales increased 0.7 percent in July to $458.6 billion, official data revealed today. Compared to year ago levels, wholesale sales were up 7.5 percent. At the current sales pace, it would take 1.16 months for wholesale businesses to clear existing inventory, the lowest since December of last year.

July durable goods sales increased 0.4 percent from the previous month and 8 percent over year-ago levels.

Nondurable goods sales edged up 1 percent from June and 7.2 percent from July 2013 levels.

Sales of grocery and related products increased 2.9 percent.

The Commerce Department will close out the week with a report on business inventories, a broader measure of stockpile accumulation that includes manufacturers and retailers in addition to the wholesale sector. Business inventories increased 0.4 percent in June, following a 0.5 percent gain the previous month, official data showed.

Compared to June 2013, total business inventories were 5.8 percent higher.

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