U.S. wholesale inventories unexpectedly rose in June on gains in stocks of farm products and other nondurable goods, suggesting an upward revision to the second-quarter economic growth estimate.
The Commerce Department said on Tuesday that wholesale inventories increased 0.3 percent after having been initially estimated as unchanged. Inventories for May were revised up to show a 0.2 percent rise instead of the previously reported 0.1 percent gain.
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Economists had forecast wholesale inventories as unchanged in June in line with the government's estimate last month. That unchanged reading was incorporated in the advance second-quarter gross domestic product estimate published last month.
The component of wholesale inventories that goes into the calculation of GDP - wholesale stocks excluding autos - increased 0.3 percent in June. That would imply a mild upward revision to the second-quarter GDP growth estimate.
An outright drop in inventory investment subtracted almost 1.2 percentage points from GDP growth in the second quarter, restricting the rise in output to a tepid 1.2 percent annualized rate. Inventories have weighed on GDP growth since the second quarter of 2015 as businesses sell piles of unwanted goods.
In June, wholesale stocks of farm products increased 4.0 percent after rising 6.2 percent in May. Wholesale inventories of drugs surged 4.9 percent after declining 3.8 percent in May. Auto inventories dipped 0.1 percent in June.
Sales at wholesalers jumped 1.9 percent after rising 0.7 percent in May. In June, it would have taken wholesalers 1.33 months to clear shelves, down from 1.35 months in May.
((Reporting by Lucia Mutikani; Editing by Paul Simao); ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters; Messaging: email@example.com)))