US business inventories increase solidly in June

Published Wed, Aug 17, 2022 · 11:15 PM

US business inventories increased strongly in June amid signs of a large build-up of stocks in the retail sector despite a pickup in sales.

Business inventories rose 1.4 per cent after advancing 1.6 per cent in May, the Commerce Department said on Wednesday(Aug 17). Inventories are a key component of gross domestic product. June’s increase was in line with economists’ expectations.

Inventories increased 18.5 per cent on a year-on-year basis in June.

Retail inventories increased 2.0 per cent in June, as estimated in an advance report published last month. That followed a 1.6 per cent gain in May. Motor vehicle inventories accelerated 3.3 per cent instead of the 3.1 per cent estimated last month. They advanced 2.4 per cent in May.

Retail inventories excluding autos, which go into the calculation of GDP, increased 1.5 per cent instead of 1.6 per cent as estimated last month.

Business inventories increased at a strong clip in the first quarter as consumer spending slowed. The excess inventory, especially at retailers, left businesses with little appetite to continue restocking, which weighed on GDP in the second quarter.

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Walmart said on Tuesday it had cleared most of its summer seasonal inventory, but still had work to do in reducing stock of electronics, home goods and apparel.

The economy contracted at a 0.9 per cent annualised rate in the second quarter after shrinking at a 1.6 per cent pace in the January-March period.

Wholesale inventories increased 1.8 per cent in June. Stocks at manufacturers climbed 0.4 per cent.

Business sales rose 1.3 per cent in June after gaining 1.0% in May. At June’s sales pace, it would take 1.30 months for businesses to clear shelves, unchanged from May. REUTERS

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