US business inventories rise slightly above expectations in July

Inventories rose 0.4 per cent after gaining 0.3 per cent in June, the Commerce Department’s Census Bureau said on Tuesday (Sep 17). PHOTO: REUTERS

Published Tue, Sep 17, 2024 · 10:45 PM

US BUSINESS inventories increased slightly more than expected in July, suggesting that inventory investment could contribute to economic growth in the third quarter.

Inventories rose 0.4 per cent after gaining 0.3 per cent in June, the Commerce Department’s Census Bureau said on Tuesday (Sep 17).

The increase in inventories, a key component of gross domestic product, was above economists’ expectations for a 0.3 per cent gain. Inventories increased 2.5 per cent on a year-on-year basis in July.

Private inventory investment contributed to the economy’s 3 per cent annualised growth rate in the second quarter. There is hope that inventories could offset some of the drag on GDP from a widening trade deficit this quarter.

The trade gap has increased as businesses boosted imports likely in anticipation of higher tariffs on goods. Most of the imports could end up as unsold goods in warehouses.

Retail inventories increased 0.8 per cent in July, as estimated in an advance report published last month. They rose 0.9 per cent in June. Motor vehicle inventories advanced 1.3 per cent instead of the previously reported 1.4 per cent. They accelerated 2.1 per cent in June.

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In the 12 months through August, import prices increased 0.8 per cent after advancing 1.7 per cent in July.

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The consumer price index increased 0.2 per cent last month after climbing 0.2 per cent in July, the Labor Department’s Bureau of Labor Statistics says.

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Within services, analysts are also keeping an eye on airline fares and hospital services prices after substantial declines in July, with many expecting a partial reversal in August.

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While price pressures have moderated, the costs of everything from grocery items to housing and car insurance are much higher than they were before the pandemic.

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The National Federation of Independent Business (NFIB) said on Tuesday (Sep 10) its Small Business Optimism Index dropped 2.5 points to 91.2 last month.

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The increase in borrowing helped fuel the biggest jump in retail sales during the month since early 2023.

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Retail inventories excluding autos, which go into the calculation of GDP, rose 0.5 per cent, as reported last month. They increased 0.3 per cent in June.

Wholesale inventories climbed 0.2 per cent in July, while stocks at manufacturers edged up 0.1 per cent.

Business sales jumped 1.1 per cent in July after being unchanged in June. At July’s sales pace, it would take 1.37 months for businesses to clear shelves, down from 1.38 months in June. REUTERS

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