US business inventories expected to show gain in June

Economic IndicatorsAssociated Press

The Commerce Department reports on stockpiles held by businesses in June. The report will be released at 10 a.m. EDT Wednesday.

MORE STOCKPILES: The expectation is that business stockpiles increased 0.4 percent in June, according to a survey by data firm FactSet.

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INVENTORY GAINS: In May, inventories increased 0.5 percent following a 0.6 percent rise in April, which was the largest gain in six months.

Inventory growth is closely watched by economists. When companies add goods to store shelves and warehouses, it shows optimism about future demand. Increasing orders to restock lifts factory production and overall economic growth.

A report last week showed that inventories at the wholesale level rose at a modest pace of 0.3 percent in June. The report Wednesday will include inventories held by factories and retailers.

In the April-June quarter, an acceleration in inventory building contributed 40 percent of the economy's 4 percent growth during the period.

That strong rebound followed the first three months of the year when severe winter weather put the economy into reverse, shrinking at an annual rate of 2.1 percent. During the first quarter, the slowdown in inventory restocking subtracted 1.2 percentage points from growth.