US WHOLESALE inventories fell for a sixth straight month in August, but the pace of decline slowed amid a surge in sales.

The Commerce Department said on Tuesday (Oct 10) that wholesale inventories slipped 0.1 per cent as previously reported last month. Stocks at wholesalers fell 0.3 per cent in July. Economists polled by Reuters had expected that inventories would be unrevised.

Inventories are a key part of gross domestic product. They dropped 1.0 per cent on a year-on-year basis in August.

Economists expect business inventories will provide a boost to gross domestic product in the third quarter. Private inventory investment was neutral to GDP in the second quarter after being a major drag in the first three months of the year. Growth estimates for the third quarter are as high as a 4.9 per cent annualised rate. The economy grew at a 2.1 per cent pace in the April-June quarter. Businesses are carefully managing inventory amid expectations of weaker demand because of higher interest rates.

Wholesale motor vehicle inventories shot up 2.1 per cent in August after rising 0.3 per cent in July. Strikes by the United Auto Workers union at General Motors, Ford Motor and Chrysler parent Stellantis could pressure motor vehicle supply.

There were decreases in wholesale stocks of furniture, computer equipment, metals, apparel, paper and drugs, chemicals as well as electrical products. But stocks of hardware rose as did those of machinery, petroleum and groceries.

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Excluding autos, wholesale inventories fell 0.4 per cent in August. This component goes into the calculation of GDP.

Sales at wholesalers jumped 1.8 per cent in August, the largest increase since June 2022, after increasing 1.2 per cent in July.

At August’s sales pace it would take wholesalers 1.36 months to clear shelves. That was the lowest ratio since October 2022 and was down from 1.39 months in July. REUTERS