U.S. businesses built up their inventories by notably more than expected in July, according to figures released Friday by the Commerce Department.
Total manufacturers' and trade inventories were estimated at a seasonally adjusted level of $1.592 trillion in July, a 0.8 percent increase from June levels.
While most economists had expected inventories to increase faster than the 0.1 percent rate posted from May to June, most had expected a slower 0.5 percent, increase for July.
Peter Boockvar, managing director at Miller Tabak, said, "A jump in inventories helps GDP short term but the opposite longer term if sales don't keep up."
Business sales, which plunged 1.2 percent in June, also showed an encouraging rebound, increasing by 0.9 percent in July - the largest percentage increase since December of 2011.
The larger increase in sales brought the inventories/sales ratio for U.S. businesses down to 1.28 in July from the 1.29 level posted in June. The June inventories/sales ratio was the highest since February of 2010.
The overall increase in inventories, the largest percentage increase since January, was driven by retailers, primarily in the automotive sector.
Retail inventories increased 1.1 percent in July, with inventories of motor vehicles and parts up by 2.7 percent. Non-automotive retail inventories were up a smaller 0.5 percent.
Wholesale inventories, which declined in June, rebounded, rising by 0.7 percent in July. Manufacturing inventories increased by 0.5 percent following a decline in June.
by RTT Staff Writer
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