Business Inventories Buildup Brings Weaker Expectations

Empty ShelvesThe Commerce Department reported on Wednesday that Business Inventories were up by 0.4% for the month of June. The consensus estimate of economists polled by Bloomberg was spot on at 0.4%, and the range of estimates was 0.3% to 0.6%.

The inventory-to-sales ratio was unchanged at 1.29. Nationwide, business inventories posted gains in each month of the second quarter.

The month-to-month change in retail inventories for June was 0.5%, coupled with only a 0.2% increase in sales. This raised the inventory-to-sales ratio to 1.42 from 1.41.

For comparison, in May, business inventories rose 0.5% and business sales rose by 0.4%. The inventory-to-sales ratio remained unchanged at 1.29.

Elsewhere on Wednesday, the Commerce Department said July retail sales were flat at 0.0% growth. A lack of sales growth has resulted in the backup of inventories for the month of July. There was also a lower buildup of wholesale inventories reported last week.

The flat growth in July retail sales and the buildup in retailer inventories from the prior month, may prove to increase an inventory glut if retail sales do not pick up in the next couple of months. In short, this could all bring about lower GDP estimates ahead.

Filed under: Economy
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