Key facts
- US business inventories rose 0.8% in July, exceeding economists' forecasts.
- Retail inventories excluding autos rose 0.8% in July.
- US retail sales increased 1.2% in August, rebounding from a July decline.
- US import prices rose 0.7% in August, exceeding forecasts.
U.S. business inventories increased more than expected in July, suggesting that restocking efforts could contribute positively to economic growth in the third quarter. Inventories jumped 0.8% in July, surpassing the 0.3% gain forecast by economists and following a 0.1% increase in June. This marks the first significant restocking of inventories in five quarters. Businesses are rebuilding stocks after five consecutive quarters of inventory drawdowns, driven by robust domestic demand. The increase in inventories, a key component of gross domestic product, could add to economic growth in the July-September period. In the second quarter, inventories had subtracted 0.72 percentage points from GDP growth, which stood at 1.5%.
Retail inventories, excluding autos, which are directly used in GDP calculations, rose 0.8% in July, a rebound from a 0.5% fall in June. Motor vehicle inventories also advanced 0.8%. Wholesale inventories increased by 1.3% and manufacturer stocks rose 0.4% in July. Business sales climbed 0.3% in July after a 1.0% decrease in the prior month. The inventories/sales ratio remained unchanged at 1.37 months in June.
Separately, U.S. retail sales increased 1.2% in August, rebounding from a July decline as consumers increased purchases of goods and spent more at restaurants and bars. Import prices rose 0.7% in August, exceeding forecasts and signaling potential further inflation.