– U.S. 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 that wholesale inventories slipped 0.1% as previously reported last month. Stocks at wholesalers fell 0.3% in July. Economists polled by had expected that inventories would be unrevised.
Inventories are a key part of gross domestic product. They dropped 1.0% 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% annualized rate. The economy grew at a 2.1% 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% in August after rising 0.3% in July. Strikes by the United Auto Workers union at General Motors (NYSE:), Ford Motor (NYSE:) and Chrysler parent Stellantis (NYSE:) 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.
Excluding autos, wholesale inventories fell 0.4% in August. This component goes into the calculation of GDP.
Sales at wholesalers jumped 1.8% in August, the largest increase since June 2022, after increasing 1.2% 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.