U.S. Wholesale Inventories Post Biggest Gain in Six Months

U.S. wholesale inventories increased more than previously reported in June, recording their biggest gain in six months, as automobile stocks rose further amid declining sales.

The Commerce Department said on Wednesday that wholesale inventories rose 0.7 percent after an unrevised 0.6 percent increase in May. The department reported last month that wholesale inventories jumped 0.6 percent in June.

Auto inventories rose 1.4 percent after advancing 0.6 percent in May. The auto sector is struggling in the face of slowing demand, which has left manufacturers with an inventory glut.

The component of wholesale inventories that goes into the calculation of gross domestic product – wholesale stocks excluding autos – rose 0.6 percent in June.

Inventory investment had a neutral impact on the second quarter’s 2.6 percent annualized growth pace after chopping off 1.46 percentage points from GDP at the start of the year.

Businesses have been carefully managing inventory amid sluggish domestic demand.

Sales at wholesalers increased 0.7 percent after dipping 0.1 percent in May. Sales of motor vehicles fell 0.5 percent after declining 0.6 percent in May.

At June’s sales pace it would take wholesalers 1.29 months to clear shelves, unchanged from May. The inventories-to-sales ratio for motor vehicles increased to 1.79 months from 1.76 months in May. That ratio has risen from 1.67 months in January.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell